Important Developments on Easter Monday

April 17, 2017

A slew of markets remained closed including the U.K., Australia, New Zealand, Germany, France, Italy, Spain, Portugal, Belgium, The Netherlands, Greece, Switzerland, Hong Kong, South Africa, Sweden, Denmark, Norway, and Hungary.

A Turkish referendum over the weekend has given President Erdogan sweeping additional powers. The lira appreciated initially more than 2.0% in response.

North Korea’s weekend test of a medium-term missile launch was attempted in spite of warnings from the Trump administration against doing so, and it failed. Rhetoric between the two sides continues to escalate.

The first round of French presidential elections is now less than a week away, with an uncertain outcome.

The dominant piece of news came from better-than-expected Chinese economic data.

  • Real GDP recorded on-year growth of 6.9% in the first quarter of 2017, up from 6.8% in 4Q16 and 6.7% in each of the first three quarters of last year. This was the biggest gain since the third quarter of 2015, led by property investment.
  • Retail sales posted a 12-month 10.9% advance in March, most since December and more than a percentage point greater than street expectations. Sales increased 10.0% between 1Q16 and 1Q17.
  • Industrial production growth of 7.6% in March also beat forecasts by more than a percentage point. Output growth of 6.8% in the first quarter surpassed a 6.0% increase in full 2016.
  • The growth of fixed asset investment in China accelerated to 9.2% last quarter from 8.1% in 2016.

Wholesale price inflation in India settled back to 5.7% in March from 6.55% in February. The 12-month WPI inflation deceleration among manufactured goods was 0.7 of a percentage point to 3.0%.

Spain’s index of leading economic indicators fell 0.1% in February following a 0.4% rise in January.

The NY Fed’s Empire State manufacturing index slumped to a 5-month low of 5.2 in April from readings of 16.4 in March and 18.7 in February.

The U.S. National Home Builders housing market index also fell by more than forecast, printing at 68 in April after a reading of 71 in March, which had been the best score in over a year.

The dollar is lower, with declines of 0.4% against the euro, 0.3% relative to the Aussie dollar, kiwi, loonie and sterling, 0.2% vis-a-vis the Swiss franc, and 0.1% against the yen.

Stocks in Asia fell 1.0% in Singapore, 0.7% in China and Indonesia and 0.2% in India, but Japan’s Nikkei edged 0.1% higher. U.S. stocks opened modestly higher.

At 2.22%, the U.S. ten-year Treasury yield remains surprisingly low. The 10-year Japanese JGB yield of zero is right at the Bank of Japan’s target level.

Industrial metal prices like copper advanced in response to the better-than-expected Chinese economic statistics released today. Oil slid 0.2%, while gold edged 0.1% higher.

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

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