A New Week Begins for Financial Markets and Trump Administration

August 21, 2017

Markets mostly marked time at the start of August’s fourth week, digesting an incredible week in U.S. politics and awaiting the Jackson Hole central bank symposium that begins on Thursday.

The dollar was narrowly mixed overnight, rising 0.3% against the Swiss franc, 0.2% versus the loonie and 0.1% relative to the euro and Australian dollar, slipping 0.1% against the yen, peso and sterling and showing no net change versus the kiwi and yuan.

Stocks in the Pacific Rim rose 0.7% in Hong Kong and 0.6% in China but fell 0.8% in India, 0.6% in Indonesia, and 0.4% in Japan and Australia. European equity markets have climbed 0.9% in Greece and 0.7% in Switzerland but dropped 0.2% in France and Germany. The British Ftse edged up 0.1%.

West Texas Intermediate oil rose 0.3% to $48.66 per barrel, and gold edged 0.1% higher to $1,292.60 per barrel.

The ten-year British gilt and German bund yields declined by three basis points and one bp, respectively. The 10-year Japanese JGB is hovering near zero, unchanged at 0.02%.

President Trump continued to draw heavy criticism over his assessment of the raicial violence  in Charlottesville, Virginia. The turmoil that has swirled around the Trump presidency is reflected in a slew of top officials to have left the government in its first seven months, including chief of staff Reince Priebus, chief strategist Steve Bannon, national security adviser Mike Flynn, a slew of other top people at the national security council, press secretary Sean Spicer, two communications directors, FBI Director Comey, and a deputy attorney general. Notably, chief economic adviser Gary Cohn and Treasury Secretary Mnuchin are still there. After huddling with his generals at Camp David yesterday, President Trump delivers a speech tonight laying out his strategy for the war in Afghanistan and surrounding countries in that part of the world.

Much of the Continental United States will experience a rare solar eclipse today. Best views will be in Oregon.

But the big looming event in this fourth week of August figures to be the Kansas City Fed-sponsored annual central banking summit in Jackson Hole, Wyoming. Both Fed Chair Yellen and ECB President Draghi are scheduled to present papers there on Friday.

In released data today, Japan’s all industry index posted an as-expected 0.4% rise in June and a 1.6% advance in the second quarter. June’s gain was led by a 2.2% jump in industrial production (5.5% on year) but muted by a 1.7% decline in construction and steady service sector activity. Japanese department store sales in July were 1.4% smaller than a year earlier, reversing June’s gain of 1.4%.

Real GDP in Thailand accelerated at a 3.7% on-year growth rate last quarter from 3.3% in the first quarter. 2Q saw the largest year-on-year rise in 17 quarters.

Producer prices in South Korea edged up 0.1% in July and were 3.0% above their year-earlier level.

Indian CPI inflation jumped to 2.4% in July from 1.5% in June.

Swiss M3 money growth held steady at a 4.0% year-over-year pace in July.

Britain’s Rightmove house price index fell 0.9% in August by was 3.1% higher than in August 2016.

Portugal recorded current account deficits of EUR 364 million in June and EUR 1.42 billion in the first half of 2017. The Greek current account swung to an EUR 842 million surplus in June from a EUR 582 million deficit in May.

Still to be released today are the Chicago Fed National Activity Index, Belgian consumer confidence, Canadian wholesale turnover, and the Indian and Australian indices of leading economic indicators.

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

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