Signals from the Fed, Bank of Japan and ECB
November 19, 2015
FOMC minutes from the October meeting released Wednesday afternoon showed most members inclined to hike the federal funds rate in December but also underscored an intention to normalize policy gradually thereafter and spreading doubts that the peak can lie much above 2%.
A five hour 20 minute meeting of the Bank of Japan Board over two days ended with a decision not to increase monetary stimulus. A released statement was almost identical to that on October 5, except for the removed remark about cautious developments regarding business sentiment in some areas and the insertion of that other signs related to inflation expectations had been relatively weak in some respects. Governor Kuroda was upbeat as usual in his press conference, noting that a second straight contraction of GDP last quarter merely reflected a drop in inventories.
Minutes from the last ECB meeting, known as the ECB Account, revealed disappointment that inflation had stopped rebounding and concern about a continuing risk of relapsing into deflation. The Account is consistent with other signals that the ECB will ease policy next month after a full review of the economy.
South Africa’s central bank is holding a policy meeting today.
The dollar weakened 0.8% overnight against the New Zealand and Australian dollars and also lost 0.3% versus the yen and euro, 0.2% vis-a-vis sterling, and 0.1% relative to the Swiss franc.
West Texas Intermediate oil slipped 0.3% to $40.65 per barrel. Such briefly dipped under $40 yesterday. Comex gold edged up 0.2% to $1,042.55 per ounce.
Following a strong Wednesday session for U.S. stocks, equities around the Pacific Rim climbed today by 1.6% in China and Taiwan, 1.4% in Hong Kong and India, 2.1% in Australia, 1.2% in Singapore, 1.3% in South Korea, and 0.8% in Japan. Advances in European trading so far amount to 1.5% in Germany, 1.0% in Spain, 1.2% in the U.K., 0.8% in Switzerland, 0.7% in France and 0.5% in Italy.
Ten-year sovereign debt yields slid two and one basis points in Germany and Britain and remained unchanged at 0.29% in Japan.
British retail sales volume fell 0.6% overall and by 0.9% excluding automotive fuel during October. These declines exceed expectations.
The CBI index of U.K. industrial trends rebounded 7 points to print in November at -11, still the second worst reading so far of 2015.
Euroland’s seasonally adjusted EUR 29.4 billion current account surplus in September was an 8-month high. The surplus over the past year has equaled 3.0% of GDP, up from 2.3% of GDP in the previous twelve-month period. The Basic Balance of Payments equaled EUR 585 billion over the past 12 months. This conceptualization includes the current account, direct investment and portfolio investment and is up from 289 billion euros a year earlier.
Switzerland posted a CHF 4.156 billion trade surplus in October, 28% bigger than September’s surplus.
Japan’s all-industry index, a monthly supply-side proxy of GDP, slipped by 0.2% in September after back-to-back 0.1% dips in July and August. Such fell 0.1% in the third quarter after a 0.3% slide in 2Q. Japanese department store sales in October were 0.2% lower than a year earlier despite faster 7.4% growth in Tokyo sales. Japanese machine tool orders in October got revised to show a 12-month drop of 22.9% from an initial estimated decline of 23.1%. The on-year decline in September was 19.1%.
Japanese stock and bond transactions generated a JPY 310 billion net capital outflow last week versus an outflow of JPY 774 billion in the prior week.
New Zealand producer output prices last quarter climbed 1.3% from 2Q but just 0.2% on year. Producer input prices advanced 1.6% on quarter but dipped 0.2% on year.
South Korean and Polish producer prices dropped 4.5% and 2.3% between October 2014 and a year later.
Wholesale turnover in South Africa and Canada increased 1.0% and 1.4% in the year to September.
Another low figure was reported in weekly new U.S. jobless insurance claims. Such fell by 5K to 271K and averaged 270-3/4K over the past four weeks.
The Philly Fed manufacturing index rose 6.4 points through the zero threshold to print at +1.9 in November, still the third lowest reading of 2015.
Copyright 2015, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Japan, Eurozone current account, FOMC, Japanese all-industry index