New Wave of Volatility and More Disinflationary Data

October 13, 2015

Yesterday’s plunge in oil prices has been followed by news of a 20.4% on-year decline in Chinese import prices and a 1.1% slide in the Aussie dollar against its U.S. counterpart.

The greenback is also up 0.7% against sterling, 0.4% relative to the loonie, 0.5% vis-a-vis the kiwi, and 0.3% against the yuan.  The dollar has slipped 0.4% against the Swiss franc, 0.3% versus the yen and 0.1% against the euro.

The Japanese Nikkei fell 1.3% following Monday’s holiday.  Share prices have fallen 3.2% in Indonesia, 1.6% in Singapore, 0.7% in Hong Kong, 0.6% in Australia but just 0.1% in China, Taiwan and South Korea.  Equities in Europe are down 1.3% in France and Spain, 1.1% in Germany, 0.8% in the U.K., 0.6% in Italy and 0.5% in Switzerland.

Comex gold is 0.8% lower at $1,154.10 per ounce.  WTI oil edged 0.1% higher to $47.15 per barrel.

Ten-year sovereign debt yields are barely changed in Germany, Japan, and Britain.

Japanese bank lending growth slowed 0.1 percentage point to 2.6% in September, matching the third-quarter result. 

Japanese consumer confidence dropped 0.9 points to an 8-month low of 40.6 in September. 

Japanese machine tool orders in September were 19.1% lower than a year earlier after a 16.5% drop in August.  Six months earlier, the March on-year change was +15.0%, by comparison.

Minutes from the Bank of Japan September Board meeting reveal that some policymakers anticipated negative core inflation for a while longer.  But remarks from Governor Kuroda continue to throw cold water on calls for an enhancement of monetary stimulus at the end of this months.

China’s trade surplus widened marginally to $60.34 billion in September, the largest monthly total so far this year.  Imports plunged 20.4% on year in yet another sign of slumping Chinese investment.  Exports, down 3.7% after on-year declines of 5.5% in August and 8.3% in July, posted a smaller drop.

The NAB measure of Australian business conditions remained at +9 in September, while business confidence rebounded four points to a 3-month high of +5.

New Zealand food prices fell 0.5% last month and were only 0.7% higher than in September 2014.

The German ZEW Institute released its measures of investor sentiment toward the eurozone and Germany.

  • Investor sentiment toward Euroland worsened another 3.2 points this month to 30.1 from 33.3 in September and 47.6 in August.  The current situation was deemed 1.4 points weaker at minus 11.1.
  • The German ZEW index sank to a mere 1.9 in October from 12.1 in September, 25.0 in August, and a long-term average of 24.8.  Current conditions printed at 55.2, down from 67.5 the month before.

Final calculations of German CPI inflation in September matched the preliminary finding of a 0.2% month-over-month dip and no change from a year earlier (down from 0.2% in both July and August and 0.7% on year in May).  The harmonized CPI fell 0.3% on month and 0.2% on year, also matching earlier estimates.

German WPI deflation deepened to a 12-month decline of 1.8% in September versus -1.1% in August.  Wholesale prices, which had dropped 0.6% on month in August, fell another 0.6% in September on such a basis. 

British consumer prices slipped 0.1% both on month and on year in September, undercutting analyst expectations by 0.1 percentage point.  Core consumer price inflation stayed at 1.0%.  Retail price inflation slowed 0.3 percentage points to 0.8%.  Producer output prices edged down 0.1% on month and were 1.8% lower than in September 2014, with a core PPI-O pace of merely 0.2%.  Producer input prices, however, scored their first monthly rise since March, a gain of 0.6%, which still left the PPI-I 13.3% below its year-earlier level.

The British government’s official house price index increased 0.7% in August, but its 12-month increase stayed at July’s 23-month low of 5.2%.

The Swiss producer price/import price index posted a 6.8% year-over-year decline in September, same as in August.  Domestic Swiss producer prices were unchanged on month and 4.8% lower on year.

Swedish consumer prices increased 0.4% in September, most since February.  The 0.1% 12-month rate of increase was above zero for the first time since May.

British same-store sales increased 2.6% between September 2014 and last month.  Britain’s indices of leading and coincident economic indicators each went up 0.2% in August according to the Conference Board.

U.S. small business sentiment according to the NFIB measure ticked up 0.2 points to 96.1 in the latest reading, a five-month high.

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

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