Risk On

May 14, 2015

The dollar retreated further on Thursday.  By mid-morning in New York it had declined 0.5% against the euro, 0.4% versus the Swiss franc, 0.3% relative to sterling and the kiwi, 0.2% vis-a-vis the Australian and Canadian dollars, and 0.1% against the yen.  The Chinese yuan is steady.

The DOW is up 0.6%, and stocks in Europe have climbed 1.0% in Germany, 0.8% in France, 0.7% in Italy, 0.5% in Spain, 0.3% in Greece but just 0.1% in Great Britain.  Markets in the Pacific Rim had a  more difficult session in contrast, with losses of 1.2% in Taiwan, 0.8% in Indonesia, 1.0% in Japan, 0.4% in China and 0.3% in Australia.

The 10-year Treasury yield fell back another four basis  points to 2.24%, and its British counterpart is 3 bps lower.

Comex gold is up 0.3% at $1,221.60 per ounce.  WTI oil is 0.2% firmer at $60.61 per barrel.

U.S. producer prices declined in April for the fifth time in six months.  The PPI fell 0.4% on month and 1.3% on year.  Core producer prices dipped 0.1% on month and to a mere 0.3% 12-month rate of increase.  Energy slumped 2.9% from March and by a whopping 24% from April 2014.  Food posted monthly and on-year declines of 0.9% and 4.2%.  There’s scant inflation in the pipeline to prompt a sense of urgency at the FOMC.

However, new U.S. jobless claims of 264K last week depressed the four-week average to 271-3/4K from 304-3/4K as recently as the four weeks to March 14.  Fed officials have implied that inflation data will be the main driver in deciding how soon to raise the federal funds rate, but labor market figures are also likely to be influential.

Japanese M2 money increased 3.6% on year in April.  That’s the same pace as in March and close to the first quarter’s on-year increase of 3.5%.  Broad liquidity grew more slowly in April (3.1%) than in March (3.3%).

Japanese stock and bond transactions generated a 371 billion yen outflow last week after a JPY 796 billion net inflow the week before.  Japanese machine tool orders decelerated to a 10.4% year-over-year advance in April from 14.9% in the year to March.

The Filipino central bank again left its key overnight borrowing and lending rates unchanged at 4.0% and 6.0%, respectively.  That decision was as expected.

Retail sales in New Zealand surged 2.7% last quarter, most since 4Q06, and were 5.1% greater than a year earlier. But New Zealand’s manufacturing purchasing managers survey signified a slower rate of expansion in April, when the index printed at a 3-month low of 51.8 after 54.6 in March and 56.1 in February.

Brazilian retail sales posted a significantly greater 0.9% monthly decline in March than anticipated and were just 0.4% above their year-earlier level.

The house price balance index compiled by the British Royal Institute of Chartered Surveyors in improved to 33 in April, best since 3Q14, from 22 in March and 15 in February.

German wholesale prices recorded a third straight month-on-month increase in April (+0.4%) but were still 0.9% lower than a year earlier.

Polish consumer prices contracted 1.1% in the year to April.  Irish consumer prices fell 0.7% in the same 12-month period.   Greek import prices slid 0.6% on month and 0.5% on year in March.

Indian wholesale prices recorded a larger-than-forecast 2.65% on-year drop in April.  Food went up 5.7%, slowing from a 6.3% rise in March.

New home prices in Canada were unchanged on month in March and just 1.2% higher in a year earlier.

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


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