Chinese Trade Data, German Industrial Orders, More Greek Austerity, and an Austrian Political Crisis

May 9, 2016

China reported a wider $45.6 billion current account surplus in April, but that increase was overshadowed by a larger 10.9% on-year drop in imports and a return to on-year slippage in exports which fell by 1.8%.  Chinese reserves increased $6.4 billion on month to $3.219 trillion.

German factory orders recovered more strongly than expected in March, rising 1.9% on month and 1.7% on year despite a 2.9% drop in domestic demand for capital goods.  Foreign orders increased 4.3%.  Orders in the first quarter were 1.4% greater than the average 4Q15 level.

Greece’s parliament approved a EUR 5.4 billion package of budget cuts and pension reforms as eurozone finance ministers meet today in Brussels.

The meeting in Brussels will be distracted by the resignation of Austria’s prime minister.

Share prices fell in much of Asia but have risen in Europe.  Stocks dropped 2.8% in China, 1.5% in Indonesia, 0.5% in South Korea, 0.2% in Taiwan, and 0.1% in New Zealand and Hong Kong.  Equities rose 0.7% in Japan and 0.5% in Australia, and they so far have advanced 1.9% in Germany, 1.4% in France, 1.3% in Switzerland, 1.2% in Spain, 1.0% in Greece and 0.6% in Britain.

The ten-year Japanese JGB yield climbed three basis points to -0.10%, while its German and British counterparts went up by two basis points each.

The dollar appreciated 1.1% against the yen, 0.4% versus the Aussie dollar, 0.3% relative to the Swiss franc and kiwi, and 0.1% vis-a-vis the euro , yuan and loonie.  The dollar lost 0.3% against the Swissie and 0.1% versus sterling. 

With the dollar in demand, gold settled back 1.3% to $1,277.60 per troy ounce.  WTI crude oil advanced 2.0% to $45.57 per barrel.  Shifting winds have prevented Alberta’s massive wildfires from doing more damage to the oil producing facilities there.

Japanese consumer confidence slipped back 0.5 points to a 2-month low of 40.8 in April.  The readings over the past year have ranged from 40.1 in February to 42.6 in December.

Japanese labor cash earnings growth accelerated more than expected to 1.4% in March from a downwardly revised 0.7% in February.

Minutes from the Bank of Japan Board meeting in mid-March observed recent slippage in expected inflation and exports but concluded that each trend would improve.

The global purchasing managers composite index ticked up to 51.6 in April from 51.5 the month before and 50.8 in February.

Ireland’s construction PMI fell 5.7 points to a 5-month low of 56.4 in April.  Such peaked at 68.8 in February.

Russia is celebrating V-E Day.

Swiss consumer prices rose 0.3% on month in April, cutting the 12-month rate of decline to 0.4% from 0.9%.

The Sentix index of investor sentiment toward the eurozone rose 0.5 points to 6.2, a 4-month high but remained well below its end-2015 level of 15.7.

The British Halifax index of house prices fell 0.8% in April, the second monthly drop in three months, resulting in a 5-month low in the on-year trend to 9.2%.

Evans and Kashkari of the Chicago and Minneapolis Federal Reserves speak publicly today.  No U.S. data releases are planned.  Mexican PPI and CPI data get released, as do Canadian housing starts.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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