Market-Friendly News

February 19, 2015

FOMC minutes released late Tuesday revealed Fed policymakers are in no hurry to raise the fed funds rate, suggesting the first move may be closer to September than June.  Concern centers on signal of tightening while inflation is close to 1%.  Another worry is the Greek debt crisis.

The ECB releases minutes of its January 22 meeting today.  This is a new innovation to promote policy transparency. 

Japanese January trade figures showed a much smaller-than-expected deficit of JPY 1.177 trillion, on-year changes in exports of +17.0% and imports of -9.0%, and a 35% on-month decline in the seasonally adjusted trade gap to JPY 406 billion.

An EU official claims that Greece has filed a request for a half-year extension of its bailout.  If approved, this would avert the prospect of a default at the end of this months.  The ECB has raised Greece’s access to ELA funds.

The Confederation of British Industries industrial trends index rose six points in February to a reading of +10, best since last August.

A number of markets are closed for the Lunar New Year holiday, including China, Vietnam, South Korea, the Philippines, Indonesia, Hong Kong, Singapore, Taiwan, and Thailand.

The dollar strengthened overnight by 0.7% against the Swiss franc, 0.5% versus the loonie and kiwi, 0.4% relative to the Aussie dollar, 0.3% against the euro, 0.2% via-a-vis the yen and 0.1% against sterling.

The Japanese Nikkei closed 0.4% higher.  In Europe, Greek stocks snapped 4.2% upward, and there have been equity rises of 0.9% in Spain, 0.8% in France and Switzerland, 0.6% in Italy, 0.5% in Germany but just 0.1% in Great Britain.  Share prices slid 0.3% in New Zealand and 0.2% in Australia.

Ten-year sovereign debt yields softened four basis points in the U.K. and two bps each in Germany and Japan.

West Texas Intermediate oil prices slumped 4.0% to $50.04 per barrel.  Comex gold advanced 1.4% to $1,217.40 per ounce.

New Zealand continues to experience mild producer price deflation.  The producer output price index edged 0.1% lower on quarter in 4Q and was 0.8% below its year-earlier level.  The PPI-I index, which is more sensitive to imported energy, fell 0.4% on quarter and by 1.9% on year.

Japan’s all industry index, a monthly proxy of GDP, slipped 0.3% and wound up 0.9% below its end-2014 level.  The all industry index rose 0.8% last quarter but on average slid 0.2% in 2014 as a whole.  In December, services and public administration fell by 0.3% and 0.7%.  Industrial production and construction rose 0.9% and 0.1%, respectively.

Stock and bond transactions last week in Japan generated a JPY 238 billion net capital inflow versus a JPY 909 billion outflow in the prior week.  Foreigners bought JPY 715 billion of Japanese bonds and JPY 114 billion of Japanese stocks.

Japanese department store sales recorded a larger 2.8% on-year decline in January versus a drop of 1.7% in December.  Japan’s index of leading economic indicators for December got revised upward by 0.4 points to 105.6, a 3-month high.  The index of coincident economic indicators remained unrevised at 110.7, highest since last May.

India’s indices of leading and coincident economic indicators rose 0.5% and fell 2.1% last month.

French consumer prices dropped 1.0% in January, producing the first on-year decline (0.4%) since October 2009.  Irish consumer prices fell 0.8% on month and 0.6% on year in January.  Finnish consumer prices fell 0.7% on month and 0.2% on year.

Euroland posted a EUR 235.5 billion current account surplus in 2014.  That equaled 2.4% of GDP, up from 2.2% in 2013.  The seasonally adjusted current account narrowed by 300 million euros to EUR 17.8 billion in December, reflecting EUR 13.8 billion of net transfer payments to foreigners.  The Basic balance (current account plus long-term capital flows) widened sharply to EUR 419 billion last year from EUR 257 billion in 2013.

The Swiss trade surplus widened 127% in January to CHF 3.43 billion.  Swiss authorities stopped intervention in the middle of the month, resulting in an enormous appreciation of the franc.

Turkish and Danish consumer confidence improved more than forecast in February.  Denmark’s reading was the best in a half year.  A preliminary estimate of eurozone consumer confidence is due later today.

Wholesale turnover in South Africa climbed 1.6% in December but was 4.3% lower than a year earlier.

U.S. releases today include the Philly Fed manufacturing index, the Conference Board’s index of leading economic indicators, and weekly jobless insurance claims to be reported by the Labor Department.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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