Several Disinflationary Signs Around the World

April 12, 2017

Chinese consumer prices fell 0.3% on month in March and  remained below a 1% 12-month trend at 0.9%. PPI inflation settled back to a 2-month low of 7.6%.

U.S. import prices posted a monthly drop (0.3%) for only the third time in the past year and a smaller on-year advance of 4.2%. Non-fuel import price inflation was just 1.0%. Export prices went up 0.2% on month.

Japanese domestic private corporate goods prices rose only 0.2% in March, half as much as in the prior month.

German wholesale prices were unchanged on month during March, and the 12-month rate of increase fell 0.3 percentage  points to 4.7%. Mineral oil and solid fuel costs were 1.2% lower than in the prior month.

Real weekly wage earnings in Britain posted their smallest on-year increase since 2014. U.K. jobless insurance claims unexpectedly rose in March and by a surprisingly large 25.5K.

In the year to March, consumer prices rose 1.4% in Portugal, and core Polish CPI inflation was just 0.6%. Spanish CPI inflation slowed to 2.3% in March from 3.0% in February.

The Bank of Canada left its overnight policy interest rate target unchanged at 0.5% as expected, observing that headline inflation has moved up to target only because of transitory factors and noting that core inflation has in fact eased.

The Central Bank of Brazil, which is also holding a monetary  policy meeting, is widely expected to cut its key interest rate by a bigger increment against the backdrop of receding inflation.

Market participants continued to focus on geopolitical dangers related to the Koreas, Syria, U.S.-Russian relations, and the new U.S. president’s see-sawing temperament.

The dollar is unchanged against the yen, euro, Swiss franc and yuan. The dollar advanced overnight by 0.5% against the kiwi and 0.4% relative to the loonie but fell 0.3% vis-a-vis the peso. The greenback is up 0.1% against the Australian currency and has edged 0.1% lower versus sterling. Bank of England Governor Carney in a speech sees no need for tighter regulation of financial market technology.

Japan’s Nikkei tumbled 1.0% and closed in the mid-18 thousands. But share prices closed up by 0.8% in Hong Kong, 0.4% in Singapore, 0.3% in Indonesia, 0.2% in South Korea and 0.1% in Australia. European stocks are somewhat higher, while U.S. stocks opened a bit lower.

Ten-year sovereign debt yields are a basis point firmer in Germany and the U.K., a basis point lower in Japan, and unchanged in the United States.

WTI oil ($53.55 per barrel) and Comex gold ($1,276 per ounce) firmed another 0.3% and 0.1%.

Core Japanese domestic machinery orders recovered just 1.5% in February, less than half as much as forecast, while public sector orders for machinery plunged 35.4% on month. Foreign demand slipped 1.1%.

Japanese bank lending grew 3.0% on year in March and accelerated from 2.5% in the final quarter of 2016 to an on-year 2.8% advance in this year’s first quarter. That’s still tepid.

The Westpac measure of Australian consumer sentiment fell 0.7% in April after a mere 0.1% uptick in March.

Retail sales in the year to February declined 3.2% in Brazil, 2.5% in Singapore and 2.0% in South Africa. Industrial production in India dropped 1.2% in that same 12-month span.

U.S. mortgage applications rose 1.5% last week, reversing a 1.6% decline in the previous week. The 30-year fixed mortgage rate fell six basis points to 4.28%.

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

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