BOJ Meeting and Several European Industrial Production Releases

October 7, 2015

The dollar shows losses of around 1% overnight against the Australian and New Zealand dollars.  It also fell 0.6% relative to sterling and 0.2% vis-a-vis the yen and loonie but is 0.2% higher against the euro.  The Swissie and yuan are steady.

Share prices around the Pacific Rim leaped 3.9% in Hong Kong, 2.2% in Singapore, and 1.2% in Taiwan.  There were smaller gains of 0.8% in Japan, 0.4% in India and 0.6% in Australia. 

European stocks have climbed 1.2% in Germany, 1.1% in Spain and Greece, 0.8% in France but just 0.2% in the U.K. and 0.1% in Italy.

WTI oil jumped 0.8% to $49.35 per barrel.  Comex gold increased 0.5% to $1,152.38 per ounce.

Ten-year sovereign debt yields are up four basis points in Britain and the United States, 2 bps in Germany and a single bp in Japan.

The Bank of Japan as expected left its policy stance unchanged.  There will be a second Board meeting on October 30, coinciding with the release of a new full review of growth and inflation.  Governor Kuroda’s remarks today imply that policy probably will not be eased then, either.

German industrial production slumped 1.2% in August, reversing July’s rise and leaving the July-August level unchanged from the 2Q mean and August’s level just 2.3% higher than a year earlier.  Analysts were expecting a much better outcome but instead got the biggest on-month decline in twelve months.  Manufacturing, construction and energy dropped by 1.1%, 1.3% and 1.4%, respectively.

Spanish industrial output sank 1.4% in August.  This also was much worse than forecast and cut the 12-month rate of rise almost in half.

Hungarian industrial production in August fell 2.0% on month.  The 6.2% on-year advance was less than the average gain in January-July.

Czech industrial production plunged 4.3% on month.  Retail sales fell 0.9% on month in August, slicing the year-on-year rise in half to 3.3%.

Danish industrial production increased 2.7% in August after dropping 2.9% in July.  The year-to-date average level was unchanged from a year earlier.

Norwegian industrial production rose 1.7% on month and 3.1% on year in August.

British industrial production increased 1.0% in August, beating the expected gain and lifting the 12-month rate of rise to 1.9%.  Factory output rose 0.5.

British shop prices fell 04% on month and 1.9% on year in September.

Romanian GDP growth slowed abruptly to a quarterly gain of 0.1% in 2Q from 1.4% in the first quarter of 2015.

Like many Asian economies, Taiwan’s WPI inflation rate is significantly under zero, printing at -8.57% in September.  Consumer prices rose 0.3% in the span.  Austrian wholesale prices fell 4.3% in the year to September.

Japan’s index of leading economic indicators fell 1.5 points to 103.5 in August, lowest since May 2014.  The index of coincident economic indicators slid 0.6 points to 112.5, earning a characterization of “weakening trend” from officials.

Japanese reserves $6.62 billion in August-September after falling $7.757 billion over the prior three months through July.  The Bank of Japan’s balance sheet expanded JPY 20 trillion between mid-year and end-September, exactly tracking the planned pace of growing the monetary base by 80 trillion yen per year.

Australia’s construction purchasing managers index dropped 1.9 points to a 2-month low of 51.9 last month.

The French trade deficit of EUR 2.975 billion in August was 43.7% smaller than that a year earlier.

Canadian building permits fell 3.7% in August but were still 15.1% greater than a year earlier.  Permits had jumped 15.5% in June and risen 0.7% in July.

U.S. mortgage applications leaped 25.5% last week.  The 30-year fixed mortgage rate declined 9 basis points to 3.99%, dipping below 4% for the first time since May.  Consumer credit arrives later.

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

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