Heavy Flow of Information Continues

September 3, 2015

The Bank of Brazil ended a 7-meeting streak of rate tightening, as risks of deepening recession outweigh danger of vicious cycle of currency depreciation and rising inflation.  The Selic Rate was left at 14.25%, its level after 325 basis points of tightening between October 2014 and July 2015.

The Swedish Riksbank likewise left monetary policy unchanged.  The repo rate stays at -0.35%.  Such had been cut by 85 basis points between July 2014 and July 2015.  The central bank did not expand its bond-buying program.  At the prior meeting in July, such was augmented by SEK 45 billion on top of the then-ceiling of SEK 80-90 billion.

The ECB Governing Council left the repo rate at 0.05%, flanked by a 0.30% marginal lending rate and a deposit rate of -0.20%.  A press conference will follow.

Released data today include composite and service sector purchasing manager surveys, Australian and eurozone retail sales, revised South Korean GDP, and Australia’s goods and services trade deficit.

The dollar is unchanged against the euro, loonie, kiwi and yuan.  The greenback rose 0.5% versus the Aussie dollar, 0.2% against sterling and 0.1% vis-a-vis the Swiss franc but edged 0.1% lower against the yen.

Ten-year German bund and Japanese JGB yields are a basis point firmer, while the British gilt yield remained flat.

Gold and oil fell overnight by 0.6% to $1,126.80 per ounce and 0.7% to $45.93 per barrel.

Stock markets fell by 1.4% in Australia, 1.2% in Hong Kong, 0.6% in New Zealand and 0.2% in China but rose 0.8% in Taiwan, 1.2% in India and 0.5% in Japan.  In Europe, equities have thus far risen 2.3% in Greece, 1.4% in Germany, 1.2% in Italy, 1.6% in Switzerland, 0.6% in the U.K., and 0.3% in Spain.

Euroland’s composite PMI for August was revised 0.1 point upward to 54.3, and the services PMI of 54.4 matched June’s 49-month high. 

Within the Eurozone, the German composite and services purchasing manager indices of 55.0 and 54.9 were each at 5-month highs and beat expectations.  Italy’s composite and service sector scores, 55.0 and 54.6, were their highest in 55 and 65 months.  While Spain’s services PMI fell to a 2-month low of 59.6, its composite PMI of 58.8 was at a 4-month peak.  Ireland reported the group’s highest readings.  The 59.7 composite score was a 4-month low, and the services reading of 62.1 was at a 3-month trough.

The British services PMI fell by 0.8 to a 27-month low of 55.6.  The U.K. composite PMI was at 55.1, down from July’s 56.6.

Sweden’s services PMI dropped 4.2 points to 52.4, lowest in many months.

Russia’s composite and services PMI readings each dropped below 50 in August.  At 49.3 and 49.1, such represented 5-month lows.

Australia’s performance of services index climbed 1.5 points to an 89-month high of 55.6 in August.

Japan’s services PMI increased 1.5 points to a 22-month high of 53.7, where 50 denotes the border between expanding and contracting activity.  The composite Japanese PMI of 52.9 in August was the best reading since January 2014.  Inflation receded, however.

India’s services PMI rose 1.0 to a 4-month high of 50.8.  The composite PMI was at a 5-month high of 52.6.

South Africa’s private-sector PMI improved to a 3-month high but remained below the 50 threshold at 49.3.

Singapore’s private PMI slid 0.5 points to a 4-month low of 50.8.

Non-oil PMI scores in August for Egypt (51.2), Saudi Arabia (58.7), and the U.A.E. (57.1) represented 8-, 5- and 6-month peaks.  Lebanon’s private PMI, however, fell 1.5 points to an 11-month low of 47.8.

Second-quarter South Korean GDP growth was confirmed at 0.3% from 1Q and 2.2% on year.

Australian retail sales dipped 0.1% in July after climbing 0.3% in May and 0.6% in June.  Sales exceeded their year-earlier level by 4.9%.  After widening 20% to A$ 3.05 billion in June, Australia’s goods and services trade deficit settled back to A$ 2.46 billion in July.

Euroland retail sales rebounded from June’s 0.2% drop with a 0.4% increase in July.  June’s decline was revised to a third of what was estimated a month ago, and sales in July were 2.7% greater than a year earlier.

Turkish consumer and producer prices respectively rose by 7.1% and 6.2% in the year to August.  A depreciating lira has underpinned inflation.

Consumer prices in Cyprus were 2.7% lower in August than a year before.

U.S. and Canadian trade balances will be reported today.  So will the U.S. services PMI and weekly jobless insurance claims.  The main event is the ECB press conference.

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

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