Oil Down but Bond Yields and Dollar Up

August 1, 2016

Many manufacturing purchasing managers surveys were published on this first day of the month.

West Texas Intermediate crude oil sank 1.8% to $40.86 per barrel. Gold edged 0.2% lower.

10-year sovereign debt yields rose six basis points in Japan, 3 basis points in the U.S. and U.K., and two basis points in Germany.

The dollar appreciated by 0.6% against the kiwi, 0.5% relative to the Aussie dollar, 0.4% against the loonie and yen, 0.2% vis-a-vis starling and 0.1% against the euro and yuan, but it’s 0.1% softer against the Swiss franc. Swiss National Bank President Jordan called the franc overvalued and warned of more forceful intervention to counter strength that’s intensified on safe haven demand in the wake of the Brexit vote.

Share prices in Europe have dropped 0.6% in France, 1.0% in Italy, 0.4% in Britain and Greece, 0.5% in Spain, and 0.2% in Germany.  In the Pacific Rim stocks rose 1.5% in Hong Kong, 0.4% in Japan, 0.8% in Singapore and 1.1% in Taiwan but fell 0.9% in China and 0.2% in India.

Markets are closed in Switzerland and Canada for holidays.

New York Federal Reserve President Dudley said markets are not pricing in enough interest rate hikes through end-2017.

The privately compiled Caixin manufacturing PMI for China advanced 2.0 points to 50.6 in July, recording the first above-50 reading since February 2015.

But the government’s Chinese manufacturing purchasing managers index of 49.9 was at a 5-month low.  The non-manufacturing PMI, 53.7, was at a 7-month high.

Japan’s manufacturing PMI improved 1.2 points to a 5-month high of 49.3.

South Korea’s manufacturing PMI slid 0.4 points to a 2-month low of 50.1.

Vietnam’s PMI reading of 51.9 was 0.7 points lower in July than June and at a 4-month low.

The Malaysian PMI of 48.1, the Indian PMI of 51.8 and the Taiwanese PMI of 51.0 each constituted a 4-month high.

Indonesia’s 48.4, however, followed a 23-month high of 51.9 and represented a 5-month low.

Russia’s factory PMI dropped back below the 50 no change level to a 3-month low of 49.5.

Hungary’s 53.9 factory PMI was at a 5-month high, but the Czech reading of 49.3 was a 40-month low.  Poland’s 50.3 manufacturing PMI was the weakest since April 2014.

Australia’s PMI jumped 4.4 points to 56.4, a 4-month high.

Britain’s PMI plunged 4.2 points in the wake of the Brexit vote to a 41-month low of 48.2.

Euroland’s purchasing managers survey exhibited relative resilience after the Brexit shock falling only 0.8 points to a 2-month low of 52.0.  Among eurozone members, factory activity contracted in both Greece and Frnace where sub-50 PMI readings of 48.7 and 48.6 were at 2- and 4-month lows.  Italy’s reading of 51.0 was at an 18-month low, and Spain’s 51.0 was a 31-month low.  But The Netherlands shot a 53.2, best in four months. The Austrian PMI (53.4) and German score of 53.8 were at 2-month lows.

Sweden’s manufacturing PMI, 55.4, was a 6-month high.

Turkey’s PMI, 47.6, was the sixth straight sub-50 score and at a 2-month low.

Brazil’s 46.0 matched the reading from March.  In between, the factory PMI sank to 42.6 in April, a record low of 41.6 in May, and 43.2 in June.  The summer Olympics begin in Brazil later this month.

South Africa’s manufacturing PMI slid to a 2-month low of 52.5 in July.

The U.S non-manufacturing PMI slipped 0.6 points to 52.6 in July, depressed by drops of 1.0 points in the jobs component and 5.5 points in prices.

U.S. construction spending had been forecast to rebound from May’s 0.9% decrease but instead fell by a further 0.6%.

In the year to July, consumer prices rose 3.2% in Indonesia and 0.1% in Thailand. Thai producer prices fell 0.8% in that span.

South Korea accumulated a $50 billion current account surplus in the first half of 2016.

Following on-year increases of 6.6% in May and 3.0% in June, Japanese motor vehicle sales edged down 0.2% in July.

Australian new home sales jumped 8.2% in June, more than reversing a 4.4% drop in May.

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



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