Dollar Down, Commodities and Stocks Up, Fillon Wins

November 21, 2016

The rebound of oil was extended on reports of an improved chance that OPEC ministers will agree to cutting output at the scheduled meeting in Vienna at the end of this month. A 1.9% increase to $46.56 per barrel of West Texas Intermediate crude helped rally commodity prices in general.

Gold at $1,215.60 per ounce is 0.6% higher. Copper has jumped 2.1%.

The dollar has depreciated 1.1% against the rand, 0.8% versus the Mexican peso, 0.5% versus the Swiss franc, 0.4% vis-a-vis the euro, loonie and Australian dollar, and 0.3% relative to the yen, kiwi and sterling.

There’s been an interruption in the dramatic climb in Treasury yields that followed the U.S. election 13 days ago. The 10-year yield settled back three basis points but at 2.32% remains considerably more appealing to capital inflows than prior to the election. ¬†The ten-year German bund rose a basis point, but comparable sovereign debt yields in Portugal, Greece and the U.K. are down by 9, 5 and 1 basis points. The Japanese JGB is unchanged following the release of several Japanese economic indicators.

Japan’s customs trade surplus of JPY 496 billion in October was almost five times greater than a year earlier. Exports fell 10.3%. Imports dived 16.5%. The seasonally adjusted surplus of JPY 474 billion was well above the third-quarter average surplus of JPY 345 billion.

Japanese supermarket sales, which had posted on-year declines of 2.9% in August and 3.2% in September, rose 0.6% in October.

Japan’s all-industry index, a supply side proxy of monthly GDP growth, went up 0.2% in September, matching the results in the two previous months. The All-industry index was 1.3% higher than a year earlier. While construction and industrial output went up 4.6% and 1.5% in September versus August, service sector activity continued to sputter, dipping 0.1% on month.

Japan’s Nikkei closed back above 18K and 0.8% on the day. In other stock markets around the Pacific Rim, share prices rose 0.8% in China and 0.4% in Hong Kong and Taiwan, but losses occurred in India, Singapore, South Korea and Australia. Stocks in Europe are up 0.5% in France, 0.7% in Greece, 0.4% in the U.K., 0.3% in Germany and 0.2% in Spain but down 0.5% in Switzerland and 0.4% in Italy.

Francois Fillon, a former French prime minister, won the center-right first-round contest for presidency by a surprisingly wide margin, overcoming another former prime minister Juppe, who came in second place, and knocking former Presdent Sarkozy out of the race. Fillon favors measures to reinvigorate French productivity but also would tighten immigration rules. The presidential election will be held next April-May.

Federal Reserve Governor Jerome Powell urged governments in Asia to take measures to quicken the growth of domestic demand, seeing that world trade is slowing.

Retail sales growth in New Zealand settled back to 0.9% in the third quarter following increases of 2.2% in the second quarter and 0.8% in 1Q. Core retail sales rose 0.3% on quarter and 5.2% on year.

Thai real GDP growth last quarter slowed to 3.2% from 3.5% in 2Q. Growth over the first nine months of the year has averaged 3.3% in Thailand, a country beset by political uncertainty.

Swiss on-year M3 money growth held steady at 2.9% last month.

The Chicago Fed National Activity index and Canadian wholesale turnover data get released later today.

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

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