Last Day of the Week, Month, Calendar Quarter, and Japanese Fiscal Year

March 31, 2017

Shortly before the release of several U.S. indicators (personal spending and income, the PCE price deflator, the Chicago PMI, and the Reuters/U. Michigan consumer sentiment index) the dollar was unchanged from last night against the euro, yen, Swiss franc, loonie, Aussie dollar and yuan. It had risen 0.3% against the kiwi and 0.1% versus the peso but fallen 0.2% against sterling.

The rand initially sank around 2.5% when word came that South African Finance Minister Gordhan has indeed been sacked, but losses were trimmed subsequently to less than 1.0%.

Share prices are mostly lower, including drops of 0.8% in Japan, 0.7% in Hong Kong, 0.5% in Australia, Britain, and Switzerland, and 0.4% in Taiwan and Indonesia. Some exceptions are New Zealand and China (each up 0.4%) and the German Dax, which is unchanged.

The 10-year JGB yield firmed a basis point. The comparable German bund is down a basis point, and the British gilt yield is flat.

Among commodities, Gold, oil and copper prices slipped 0.3%. Oil is above $50 per barrel on signs that several producers are inclined to extend output reductions.

The Bank of Mexico hiked its overnight interest rate late yesterday by another 25 basis points to 6.50%. There has been a cumulative rise of 125 basis points since President Trump was elected. Peso depreciation last year has lifted Mexican inflation.

Among released Japanese economic indicators,

  • A 2.0% rise of industrial production in February beat expectations.
  • The jobless rate fell 0.2 percentage points to 2.8% in February.
  • After posting a 12.8% on-year rise in January, housing starts were 2.6% lower in February than a year earlier (a leap month). But construction orders recorded a 12-month increase for a third straight time, rising 5.7%.
  • Motor vehicle output in February surpassed the year-earlier level by 11.2%.
  • Real household spending dropped 3.8% on year in February, three times faster than January’s drop, despite a 1.7% increase in real disposable incomes.
  • Core CPI inflation rose from 0.1% in January to 0.2% in February. The energy component turned positive.

Government-compiled Chinese purchasing manager surveys were mixed. The manufacturing PMI continued to show quickening expansion, edging up 0.2 points to 51.8 in March. However, the non-manufacturing PMI dropped 2.7 points to a reading of 51.5.

Euroland’s harmonized CPI rate fell back from 2.0% in February to a 3-month low of 1.5% in March. Core inflation of 0.7% was down from 0.9% in the three prior months and 1.0% in March 2016. Service sector price inflation slowed to 1.0% from 1.3%, and energy inflation settled back to a 3-month low of 7.3% from 9.3%.

German retail sales volume bounced back 1.8% in February, but January-February combined was unchanged from the average 4Q16 level and just 0.3% greater than a year earlier.

German labor statistics beat expectations. The jobless rate edged down 0.1 percentage point to 5.8%. 30K fewer workers were unemployed in the month, bringing the quarterly decline to 74K. Employment in January-February exceeded the year-earlier level by 1.4%.

British GDP expanded 0.7% last quarter according to final estimates. That followed a 0.5% increase in 3Q16 and was the fastest growth rate since the last quarter of 2015. The U.K. current account deficit fell by half last quarter to a smaller-than-predicted GBP 12.1 billion.

In the year to March French consumer prices rose 1.1%, while Italian CPI inflation was 1.4%. Both figures were lower than February’s readings. In the year to February, producer prices went up by 3.9% in France and 3.3% in Italy. French consumer spending dropped 0.8% on month in February, cutting the 12-month increase to 0.5%.

New Zealand building permits shot up 14% last month. But business sentiment was lower in March than February. Private credit in Australia rose 5.0% in the year to February, and M3 money grew 7% in the same interval.

Two men named Donald took provocatively tough stands.

  • U.S. President Donald Trump tweeted that his former national security adviser of 3 weeks, Flynn, should seek a grant of immunity before testifying on his connections with Russia. He called the investigation into Russia’s meddling in the U.S. election just a “witchhunt.”
  • EU President Donald Tusk said Britain would have no more than a year to negotiate a trade deal with the European Union and reiterated that an exit bill would need to be paid before those talks can even begin.

Just in: U.S. real personal consumption expenditures edged up by a smaller-than-forecast 0.1% in February and fell 0.1% in volume terms. Inflation measured by the Fed-favored PCE deflator slowed to 0.2% from 0.3%, although the February core PCE deflator was unchanged at 1.8%. There continues to be a disconnection between survey data on business and consumer sentiment and the hard data that actually determine real economic growth.

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

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