Lots of U.S. Data and a Yellen Press Conference This Ides of March

March 15, 2017

The Federal Reserve will release new macroeconomic forecasts and  is expected to raise the fed funds target at 18:00 GMT, and the press conference begins a half hour later.

The dollar softened overnight by 0.6% against the peso, 0.5% versus sterling, 0.4% relative to the New Zealand and Australian dollars, 0.3% vis-a-vis the loonie and euro and 0.2% against the yen and Swissie. The yuan is unchanged after a top Chinese officials spoke optimistically about chances for avoiding an all-out trade war.

West Texas Intermediate crude oil recovered 2.1% to $48.73 per barrel, and industrial metals also appreciated. Gold is little changed and hovering close to $1,200 per ounce.

Ten-year British gilt and Japanese JGB yields are steady, while the yields on the U.S. Treasury and German bund are lower.

Equities were pretty stable in Asia, the U.K., France, Germany and Switzerland but have risen 0.7% in Spain and Italy.

The initially reported 0.8% drop in Japan’s January industrial production has been halved in the revised estimate to a dip of only 0.4%, which lifted the 12-month rate of increase to 3.7%. Capacity usage and capacity respectively rose 0.1% and dipped 0.1%.

British unemployment claims fell more than twice as much in February as was forecast. The drop was 11.3K. Average wage earnings recorded on-year growth in November-January of 2.1%, the least in ten months, and the ILO jobless rate in that period of 4.7% was the lowest since August 1975 and down 0.4 percentage points from a year ago.

The Swiss PPI/import price index sank 0.2% in February and was 1.3% higher than a year earlier. Both changes undershot street expectations. Domestic producer prices fell 0.4% on month and rose just 0.4% on year.

Between February 2016 and last month, consumer prices climbed 1.2% in France and 1.6% in Italy. Italian retail sales were 0.1% lower in January than a year before.

Euro area employment expanded 0.3% last quarter and was 1.1% greater than in the final quarter of 2015. The jobless rate averaged 1.3% in 2016.

General elections in the Netherlands are being held today. A strong populist challenge is being watched closely there.

Turkish unemployment of 12.7% in December was 1.9 percentage points higher than at the end of 2015. Seasonally adjusted joblessness was at 12.0%.

South African retail sales dropped 1.2% in January and was 2.3% lower than a year earlier.

Australian consumer sentiment edged 0.1% higher in March, but new motor vehicle sales there posted a 2.3% on-year decline in February. New Zealand’s recorded a current account deficit in 2016 equal to 2.7% of GDP, down from a shortfall equaling 3.4% of GDP the year before.

U.S. consumer price data and retail sales figures were more or less consistent with expectations. Consumer prices went up 0.1% on month, but their 12-month rate of increase accelerated 0.2 percentage points further to 2.7%. Core inflation also exceeded 2.0% at 2.2%, down from January’s 2.3%. Retail sales edged only 0.1% higher in February but surpassed their year-earlier level by 5.7%.

The U.S. Empire State manufacturing index slipped back less than predicted to a reading of 16.4 in March from 18.7 in February.

U.S. real hourly wage earnings in February were unchanged from a year earlier. Mortgage applications jumped 3.1% last week as borrowers raced to lock in mortgage costs before they rise higher. The 30-year fixed rate mortgage yield of 4.46% was 10 basis points greater than in the prior week.

U.S. data still to come include existing home sales and the National Association of Home Builders housing market index.

The Fed’s rate decision will be followed about 10-11 hours later by the Bank of Japan Board’s policy decision. Central banks are also holding policy meetings Thursday in Switzerland, the U.K., Indonesia, Turkey, Norway and Chile.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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