A Different Trump on the Road

May 22, 2017

The first leg in Saudi Arabia of President Trump’s nine-day foreign trip went well. Gone was the xenophobic tone as his anti-terrorism message focused on Iran instead of Islam as a religion. There weren’t major cultural slips, and large business deals were consummated. Absent, too, were the usual Saturday tweets to add fuel to the president’s domestic political troubles. That’s not to say that the domestic problems went away. It became apparent from news reporting that the sources of leaks go very high in the White House. Meanwhile, the White House sends its budget proposals to Congress tomorrow, and these include a decade-long slashing of domestic discretionary spending on such things as Medicaid and food stamps that averages $170 billion per year. Many people under the poverty level would die if enacted.

Britain’s official in charge of Brexit talks said such are to begin June 19, just a week and a half after the scheduled U.K. parliamentary election, but warned that the U.K. “will quit talks on leaving the European Union unless the bloc drops its demands for a divorce payment as high as EUR 100 billion.”

The dollar traded 0.2% higher against sterling and the yen overnight but is down 0.2% versus the euro and Swiss franc, 0.3% relative to the New Zealand dollar and 0.4% vis-a-vis the peso. The loonie and Aussie dollar are steady.

As Mondays are often, today has been a light one from a data release standpoint. The major piece of economic news involves Japan’s smaller-than-expected customs clearance trade surplus, which fell 40.6% on year to JPY 482 billion in April and to a tad less than JPY 100 billion on a seasonally adjusted basis. Exports were 4.0% lower than in March, while imports rose 3.5% on month. Compared to a year earlier, imports advanced 15.1%, led by mineral fuel, while exports advanced 7.5%, down from a 12.0% rise in the year to March.

In other market developments aside from the aforementioned mixed changes in the dollar’s average value,

  • West Texas Intermediate crude oil rose 0.7% to a 1-month high of $50.70 per barrel.
  • The ten-year German bund and Japanese JGB yields increased by three and one basis points.
  • Equities in the Pacific Rim climbed 1.2% in Hong Kong but fell 0.5% in China and 0.7% in Indonesia. Stocks closed up 0.7% in South Korea, 0.8% in Australia and 0.5% in Taiwan. Turning to Europe, share prices have firmed 0.3% in the U.K. thus far but are down 1.1% in Italy, 0.4% in Germany, and 0.3% in Spain.
  • Comex gold is 0.2% firmer at $1,256.20 per troy ounce.

The Victoria Day holiday is being observed in Canada today.

In the year to April, producer prices rose 1.8% in April in Ireland, down from 12-month increases of 2.1% in March and 2.4% in February. South Korean PPI inflation likewise decelerated to 4.0% from 4.2% in March and 4.3% in February.

M3 money growth in Switzerland remained steady at a low 3.0% in April.

The Greek current account deficit in March of EUR 1.32 billion was 41% wider than the month before.

The British Rightmove house price index recorded a 12-month rise of 3.0% in May, down from 3.2% in April and 4.2% last November.

In the U.S., the Chicago Fed National Activity Index is scheduled for release later today. Proposed terms of an agreement between Greece and its creditors are foremost on the agenda of a Eurogroup meeting today. The deal enables Greece to receive the next tranche of debt service aid. President Trump’s trip moves on to┬áIsrael.

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

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