Brexit Dye is Cast

March 29, 2017

British Prime Minister has signed a letter informing EU governments that Article 50 is being invoked today. This starts a 2-year period of negotiations on the terms for the U.K. leaving the European Union, which will happen on March 29, 2019. Sterling is down just 0.1% against the dollar. The Ftse has lost 0.2% today, and the 10-year gilt yield is off two basis points at 1.17%.

The dollar fell most sharply overnight against the yen, 0.8%. While small business sentiment in Japan improved 2.8 points to 50.5 in March, its best reading in well over a year, Japanese retail sales in February were only 0.1% above a year earlier.

The dollar also slipped 0.4% relative to the peso, 0.3% against the Australian dollar, and 0.2% versus the loonie and kiwi. Political uncertainty in South Africa extended the rand’s slide.

U.S. equities shrugged off worries yesterday about the Trump agenda’s chances of passage following the surprising revelation that the Conference Board’s U.S. consumer confidence index had leaped 8.1% to a 16-year high of 125.6 in March from 116.1 in February, 111.8 in January and a 100.8 as recently as last October.

Equities in the Pacific Rim advanced 1.0% in New Zealand, 0.9% in Singapore, Indonesia and Australia but just 0.1% in Hong Kong and Japan. China’s market fell 0.4%. Stocks are up in Germany, Greece, France and Switzerland but lower in the U.K., Spain and Italy.

Ten-year German bunds and Japanese JGB yields slipped a basis point.

West Texas Intermediate crude oil is up 0.2% at $48.58 per barrel, whereas Comex gold eased 0.3% to $1,255.10 per ounce.

German import prices recorded a 7.4% 12-month rate of increase in February, most since April 2011, due to a 49.7% upsurge in energy and a collective increase of 3.7% in the rest of the index. Export prices were 2.5% higher than a year earlier.

Investor sentiment toward Switzerland reflected in the ZEW expectations index printed 10.2 points higher at +29.6 in March. The UBS Swiss consumption indicator climbed another 0.06 points to a six-month high of 1.50 in February.

French consumer confidence held steady for a third straight month in March.

Italian consumer sentiment went up a point in March to a reading of 107.6. Business sentiment in Italy improved 0.8 points to a 15-month high.

Sweden’s economic tendency index fell to a 4-month low of 109.2 in March from 110.8 in February and 111.9 in January. Consumer confidence also weakened.

In the year to February, producer prices fell 5.5% in Iceland but rose 7.9% in Singapore.

The Bank of Thailand’s key interest rate was left unchanged a 1.5%. It has been at that level since April 2015. It had not been that low previously since June 2010.

U.S. pending home sales get reported today, and several more Fed officials are speaking publicly.

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

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