A Second Presidential Debate is the Talk of the Town
October 10, 2016
Holidays are impacting trading this Monday. It’s Sports Day in Japan, Chung Yeung Day in Hong Kong, Thanksgiving in Canada, and Columbus Day in the United States. On the other hand, China, whose market was closed all last week for the National Holiday, reopened for business with the yuan marked up 0.5% to a six-year high against the dollar.
A second debate last night between Clinton and Trump was even nastier than anticipated. The debate followed the publishing a video of Trump using lewd language about women and an ensuing rash of Republican lawmakers disavowing support in their party’s condidate. But Trump in vintage bullying style came out swinging from the outset, and Clinton had to play defense most of the way. Post-debate opinion polls seemed to confirm that each candidate had held onto their base support but likely changed few minds. The most obvious market barometer of the presumed debate impact on who will win the election has been the Mexican peso, and it’s overnight appreciation of almost 2% points to confidence that Clinton will prevail. But one should be cautious about interpreting that reaction. Remember, investors got the British Brexit referendum terribly wrong.
The dollar has strengthened 0.4% against the yen, 0.3% relative to the Swiss franc, 0.2% versus the euro and kiwi, and 0.1% vis-a-vis sterling, but it also has dipped 0.1% against the Australian and Canadian monies.
British gilts continues to lose value. The ten-year yield increased another four basis points, while the German bund yield climbed by two basis points.
Share prices in the Pacific Rim leaped 1.5% in China, making up for a week’s closure. Otherwise, stocks rose 0.2% in Australia and South Korea but lost 0.8% in New Zealand, 0.4% in Hong Kong, 0.3% in Indonesia and 0.2% in Taiwan and Singapore. In Europe, stocks have risen 0.6% in Italy, 0.5% in Germany, 0.4% in Spain and 0.2% in the U.K. and France.
Oil settled back 0.4% but remains not far below the $50 per barrel threshold for West Texas Intermediate crude, buoyed by speculation that OPEC producers will reach an accord to stabilize the price. Gold climbed 1.0% to $1,264.10 per troy ounce.
Germany’s trade and current account surpluses in August were wider than forecast. The seasonally adjusted trade surplus of EUR 22.2 billion matched the second quarter monthly average and followed a EUR 19.4 billion surplus in July. The nonadjusted current account surplus of EUR 17.9 billion was EUR 3.5 billion bigger than a year earlier. The on-month leaps of 5.4% in merchandise exports and 3.0% in imports were the largest increases in more than a year.
The Bank of France reported unchanged readings in September for French business sentiment in the manufacturing and construction sectors and a 1-point rise in services business confidence.
Italian industrial output in August surpassed its year-earlier level by 4.1% but had posted a 0.3% dip in July.
The Sentix gauge of investor confidence toward the euro area economy rose for a third straight month in October, reaching a score of 8.5 after 5.6 in September, 4.2 in August and 1.7 in July, but the Sentix was still shy of June’s 2016 high of 9.9.
The Norwegian krone was depressed by lower-than-expected CPI and PPI inflation last month. The CPI’s on-year pace fell to 3.6% from 4.0% in August and 4.4% in July, while the on-year decline of producer prices widened to 6.1% from 4.7% the month before. Weak inflation gives the Bank of Norway extra reason to keep interest rates very low.
Ireland’s construction purchasing managers index rose 0.3 points to a 2-month high of 58.7 in September, still 2.3 points under July’s reading.
In the year to September, Greek consumer prices fell 1.0%. Czech and Danish consumer prices in September were respectively 0.5% higher and unchanged from year-earlier levels.
Greek industrial production in August was 0.3% lower than a year earlier.
Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: German current account, Mexican peso, U.S. presidential debate