A Pause in the Action

September 13, 2017

Movements in stocks, the dollar, and sovereign debt instruments have been minor so far today especially compared to those earlier in the week. The most significant action has been a drop in copper (1.5%) and other industrial metals.

The dollar slipped 0.3% against the Australian and Canadian dollars, 0.2% versus the euro and 0.1% vis-a-vis the yen and Swiss franc but rose 0.2% against the Mexican peso and 0.1% relative to sterling while holding steady versus the kiwi and yuan.

Ten-year British gilt and Japanese JGB yields dipped a basis point. Their German bund counterpart is steady.

Stocks in the Pacific Rim rose 0.5% in Japan and 0.1% in China and India but declined by 0.7% in Taiwan, 0.5% in Indonesia, 0.3% in New Zealand and 0.2% in Singapore and South Korea. Stocks in Europe have firmed 0.4% in Greece, 0.2% in Italy and 0.1% in Spain but are down 0.2% in the U.K. and 0.1% in Germany and Switzerland.

West Texas Intermediate crude oil and Comex gold rose by 0.9% and 0.5% to $48.66 per barrel and $1,338.80 per ounce.

Industrial production in the euro area increased just 0.1% in July after a 1.2% quarterly advance in 2Q. Output was weighed down by a 1.2% drop in energy.

Euroland employment rose 0.4% in the second quarter and posted the same 1.6% year-on-year advance as in the first quarter of 2017. That’s a decent pace.

German consumer prices edged up 0.1% in August and accelerated o.1 percentage point to a 1.8% on-year climb, most in four months. Energy prices were 2.3% higher than a year earlier up from a 0.9% 12-month increase in July. The energy component in June had been unchanged from a year earlier. Service price inflation decelerated to 1.6% from 1.7%. German core CPI inflation was 1.6%, down from 1.7% in July.

Germany’s wholesale price index rose 0.3% on month and 3.2% on year — a 4-month high and up from 2.2% in the year to July. Energy went up 8.2% on year compared to on-year increases of 2.7% in July and 1.3% in June.

The latest batch of British labor statistics is mixed. There was an unexpected decline of 2.8% in jobless insurance claims in August, and the May-July ILO-basis jobless rate of 4.3% was at its lowest level since 1975. But on-year growth in average weekly earnings remained very subdued at 2.1% in July.

The Swiss producer price/import price index recorded a larger 0.3% monthly increase in August, lifting its 12-month rate of change to +0.6%. While domestic producer prices fell 0.5% on year, import prices climbed 2.7%.

Spanish CPI inflation edged up 0.1 percentage point to a 3-month high of 1.6% in August.

Swedish GDP growth in the second quarter was revised down by 0.4 percentage points to 1.3%, still twice as fast as first-quarter growth and associated with a decent 3.1% on-year advance.

Japan’s Ministry of Finance reported quarterly business sentiment, whose diffusion index for all large companies jumped 7.1 points to 5.1 in the third quarter. Moreover, respondents to the survey expect an even higher reading next quarter.

Japanese domestic corporate goods prices stayed flat in August but increased to a 12-month pace of 2.9% in August from 2.6% in the year to July and negative 3.8% in the year to August 2016. Import and export prices posted on-year advances of 12.5% and 8.6% in the latest reported month.

The Westpac measure of Australian consumer sentiment rebounded 2.5% in September from a 1.2% decline in August. New Zealand food price inflation slowed to 2.3% in August from 3.0% in July.

Today’s calendar of U.S. data releases features producer prices and also includes Treasury-compiled capital flows (TIC data) and the August federal budget deficit.

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

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