Bond Yields, Stocks, and Dollar Higher

May 19, 2015

The dollar strengthened 1.4% against the euro, 1.0% versus the Swiss franc, 0.8% relative to sterling, 0.6% vis-a-vis the Canadian and Australian dollars and 0.2% versus the kiwi.  The yuan held steady.

Ten-year Treasury and British gilt yields are four and three basis points firmer.

Equities in the Pacific Rim rise by 3.4% in China, 1.2% in Taiwan, 0.6% in Indonesia, 0.7% in Japan, and 0.4% in Hong Kong.  In Europe, stocks have climbed by 1.9% in Greece, 1.5% in in Italy, 1.7% in France and Germany, 1.0% in Spain and 0.9% in Switzerland.

Comex gold fell by 1.1% to $$1,214.50 per troy ounce.  West Texas Intermediate oil dropped 2.0% to $58.24 per barrel.

Eurozone CPI inflation at zero was non-negative in April for the first time since November.  Consumer prices rose 0.2% on month, with energy up 0.1% and all other prices collectively climbing 0.3%.  Core inflation was at 0.6% for the third time in four months.

British CPI inflation, which had been at zero in February and March, slid to negative 0.1% in April.  The CPI rose 0.2% on month.  Core inflation eased to 0.8% from 1.0% in March and 1.2% in February.  Producer output prices fell 1.7% on year, with a core rate of +0.1%.  Producer input prices dropped 11.4% on year in April.  House price inflation according to the former DCLG index accelerated to a 3-month high of 9.6% in March from 7.4% in February.

Euroland recorded a EUR 19.7 billion seasonally adjusted trade surplus in March.  This five-month low reflected on-month growth of 3.9% in imports versus 1.9% in exports.  The unadjusted first-quarter surplus of EUR 52.6 billion was 71% wider than the year-earlier surplus due to 3.0% growth in exports.  Imports went up just 0.4% between 1Q14 and 1Q15.

EU new car sales growth from a year earlier slowed to 6.9% in April from a 1-year high of 10.6% in March.

The German ZEW Institute of investor expectations toward Germany suffered a setback in May, declining to a 5-month low of 41.9 from 53.3 in April.  The current conditions subindex printed 4.5 points lower at 65.7.  The eurozone expectations index of 61.2 was at a 2-month low after 64.8, but current conditions continued to improve, posting a smaller negative reading of 16.5 after -28.3.

Greece is fast running out of funds and needs a debt deal with its creditors before the end of May, reliable sources claim.

U.S. housing starts leaped 20.2% on month and 9.2% on year in April, far exceeding street forecasts.  Building permits went up 10.1% on month and 6.4% on year.  The Redbook index of chain store sales slid 0.2% last week but was 1.8% higher than a year earlier.

Japanese department store sales swung from an on-year decline in March of 19.7% to a rise of 13.7% in April.  Tokyo sales increased 17.8% on year after dropping 16.5% in the year to March.

After holding at 3.3% for more than a half year, Hong Kong unemployment ticked downward to 3.2% in February-April.

Bank Indonesia held its key BI interest rate steady at 7.5% at this month’s Board meeting but augmented macroprudential stimulus further by lowering reserve requirements.

Minutes from the Reserve Bank of Australia’s May policy meeting revealed a continuing bias toward cutting the Official Cash Rate even further after cutting such to 2.0% from 2.25%.  According to the Conference Board, Australia’s index of leading economic indicators edged 0.1% lower in March.

In New Zealand, producer input prices slumped 1.1% on quarter in 1Q and were 4.0% lower than a year earlier. Producer output prices slipped 0.9% on quarter and 2.5% on year.  In 4Q14, PPI-O and PPI-I inflation had been at -0.8% and -1.9%.

South Korean producer prices stagnated on month in April and were 3.6% below a year earlier.

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

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