FOMC, British Budget and a Stellar Japanese Trade Report Highlight this Wednesday

March 18, 2015

West Texas Intermediate oil sank another 2.8% to $42.26 per barrel, posing a challenge to the $40 threshold.  Gold at $1,147.1 per ounce, has lost 5.4% since February 27.

The FOMC is widely expected to drop the word “patient” from its statement, due at 14:00 EDT (19:00 GMT).  The statement will be accompanied by new forecasts and followed by Janet Yellen’s press conference at 14:30 EDT.

British Chancellor George Osborne presents what is promised to be an austere budget today.  U.K. elections will follow in May.

Japan recorded the smallest trade deficit, JPY 425 billion, in February since June 2013.  Exports were 2.4% higher than a year earlier, while imports fell 3.6%, thanks to a plunge of 35.6% in purchases of mineral fuels.

Prime Minister Netanyahu handily won reelection in Israel after promising never to permit a Palestinian State under his watch.

Bank of England minutes of its March 4-5 policy meeting revealed another 9-0 vote endorsing no change in the 0.5% Bank Rate or GBP 375 billion limit on the Asset Purchase Program.  Two of the nine members of the Monetary Policy Committee found their votes for no change to be “finely balanced.”  Policymakers agreed that an interest rate is likely within three years.

The Bank of Iceland left its 7-day uncollateralized lending rate at 5.25% for a second meeting in a row.  Such had been cut by 25 basis points in November and another 50 bps in December.

The Central Bank of Sri Lanka also kept its key interest rates — 8.0% on the reverse repo and 6.5% on the repo rate — unchanged after the latest policy meeting.

The dollar has fallen 0.5% against the Swiss franc, 0.3% relative to the yuan, euro and kiwi, 0.2% versus the yen and 0.1% against the Aussie dollar.  The greenback is unchanged against the loonie and 0.4% stronger relative to sterling.

Share prices advanced 2.4% in China, 1.2% in Taiwan, 0.9% in Hong Kong and 0.6% in Japan but fell 1.0% in New Zealand, 0.5% in Indonesia, 0.4% in India and 0.2% in Singapore.  European stock markets have declined 1.2% in Germany and Italy, 3.7% in Greece, 0.5% in France and 0.4% in Spain.  The British and Swiss stocks have risen 0.6% and 0.5%, in contrast.

The Japanese JGB yield is four basis points lower, and its British counterpart has fallen seven bps.  German bunds are steady.

New Zealand’s seasonally adjusted current account deficit widened 7% on quarter to NZD 2.621 billion in 4Q14, equivalent to 3.3% of GDP versus 2.6% in the third quarter of 2014 but matching the ratio in the final quarter of 2013.

Italy’s trade surplus plunged to just EUR 219 million in January from EUR 5.756 billion in December, as exports fell 2.5% and imports climbed 1.0%.

Euroland posted a smaller-than-forecast EUR 7.9 billion unadjusted trade surplus in January.  The surplus widened 27% in 2014.

British labor statistics revealed a 28th straight drop in the jobless claimant count during February, this time by 31K.  But wages were more subdued than forecast, posting on-year increases in November-January of 1.8% overall and just 1.6% on regular pay only. 

Chinese property prices weakened on month for a sixth straight time in February, and their on-year drop of 5.7% was the biggest decline in this 3+ year old data series.  Prices fell on month in 66 of 70 cities and on year in all but one city.

Japanese machine tool orders were confirmed to have advanced by 28.9% on year last month, matching the preliminary estimate.  Such orders had risen by 33.9% in December and 20.4% in the year to January.

South Korean unemployment increased to 3.9% last month from 3.4% in January.  Westpac’s index of Australian leading economic indicators rose 0.3% in February, beating the 0.1% uptick in January.

A 1.7% on-year rise in South African retail sales was smaller than expected in January.

U.S. mortgage applications fell by 3.9% last week, and the 30-year fixed mortgage rate dipped two basis points to 3.99% from 4.01%.  Canadian wholesale turnover dropped 3.1% on month in January, also more than forecast, and this reduced the 12-month increase to 7.1% from 11.3%..

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


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