Japanese and U.S. Data Dominate Tuesday News

December 27, 2016

Core Japanese consumer price inflation remained at -0.4% in November, but Tokyo’s core rate of deflation was -0.6% in December, a new extreme for 2016. Energy price deflation is lessening, but overall price data are not responding commensurately.

The Japanese jobless rate edged up 0.1 percentage point to 3.1% in November. Employment grew 1.1% on year, and the job offers/seekers ratio increased to 1.41 from 1.40.

Japanese small business sentiment improved to a 9-month high of 48.8 in December after back-to-back 48.3 readings in October and November.

Japanese real household spending registered a 1.5% on-year decline in November despite a 1.4% rise in disposable incomes. Real household spending also fell 0.6% on month.

Japanese housing starts recorded the smallest on-year rise (6.7%) in November since August. Construction orders fell 6.0% in the year to November after gains of 13.8% in August, 16.3% in September and 15.2% in October.

The Conference Board’s U.S. consumer confidence index leaped 4.3 points to a 2016 high of 113.7 in December, and the reading for November was revised to 109.4 from 107.1 estimated initially. Before the election, consumer confidence printed in October at just 100.8, and such got as low as 90.4 back in May. December’s improvement was entirely due to more optimistic expectations.

The Richmond Fed manufacturing index doubled to a 6-month high reading of +8 in December. Such had been as low as negative 11 back in August.

The Dallas Fed manufacturing index also hit a 2016 high in the final month of this year, printing at 15.5 after scores of 10.2 in November, -1.5 in October and -6.2 as recently as August.

The Case Shiller index of home prices in 20 metropolitan areas rose 0.6% on month and 5.1% on year in October.

Trading volume continues to be dampened by holiday closures. Markets remained shut in the U.K., Australia, New Zealand, Canada, and Hong Kong.

The dollar has firmed 0.3% against the yen, 0.2% versus the loonie, Swissie, and kiwi, and 0.1% relative to the Australian dollar. EUR/USD is steady, and so is the dollar value of the yuan.

Japan’s Nikkei closed unchanged. Share prices have risen slightly in the United States and Germany. They have posted advances of 1.6% in India and 1.5% in Greece so far and Indonesia but fell 0.3% in China.

Ten-year sovereign debt yields are up 3 basis points in the United States but down a basis point in France and Germany. Japan’s 10-year JGB yield is unchanged at 0.05%.

Commodity prices have strengthened. Comex gold is 0.6% higher at $1,140.90 per ounce, and WTI crude oil has advanced 1.1% to $53.62 per barrel.

Corporate profits in China recorded a much greater 14.5% on-year increase in November, which lifted the year-to-date increase to 9.4%. In the first 11 months of 2015, profits were 8.6% greater than a year earlier.

German import price inflation exceeded zero in November for the first time in four years. Import prices were 0.3% higher than a year earlier compared to on-year declines of 0.6% in October, 1.8% in September, and 2.6% in August. When excluding mineral fuels, import price inflation also crossed into positive territory.

South Korean consumer confidence fell 1.8 points to a reading of 94.0 in December. In the Czech Republic, consumer confidence rose 0.7% in December, but business sentiment slid 0.4%.

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

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