Ton of Released Data but Tepid Market Reaction

September 29, 2017

Strong dollar gains this week were in most cases not extended on the final business day of September and the quarter. The dollar is down 0.2% against the euro and 0.1% relative to the yuan and Swiss franc. The loonie and peso are unchanged. The dollar rose 0.2% against the New Zealand and Australian dollars, 0.1% vis-a-vis the yen and 0.4% against sterling.

Gold firmed 0.2%, while WTI oil is 0.2% lower than yesterday.

Ten-year sovereign debt yields backed down two basis points in Germany and a basis point each in the U.K. and Japan.

Equities closed unchanged in Japan. Elsewhere in the Pacific Rim, stock markets rose 1.0% in Indonesia, 0.9% in South Korea, 0.6% in Hong Kong, 0.3% in China, 0.2% in Australia and 0.3% in India and Taiwan.

Stocks in Europe are trading higher by 0.6% in the U.K., 0.4% in Germany, and 0.1% in France, Switzerland and Italy.

The Bank of Mexico late yesterday decided not to change its 7.0% interest rate level. There was a significant tightening of the stance earlier this year. Inflation is expected to trend lower, and the recent earthquakes impose new uncertainties.

Japan reported an unchanged 2.8% jobless rate; a 2.1% rise in industrial production during August associated with a 5.4% advance from a year earlier; on-year declines 10.6% in construction orders and 2.0% in housing starts during August; a 0.2% on-month increase in real household spending associated with on-year growth in spending of 0.6% and in real disposable income of 1.6%; the higher core CPI inflation rate (0.7%) since November 2014, namely 0.7%; core Tokyo CPI inflation of 0.5% in September versus 0.4% in August; a much greater-than-forecast 1.7% monthly drop in retail sales that left such 1.7% higher than a year earlier; and a 5.6% 12-month advance in motor vehicle output during the year to August.

British real GDP rose 0.3% on quarter in 2Q, the same pace as in 1Q, and this resulted in a 1.5% increase from a year earlier, the smallest on-year advance in four years. Growth last quarter was led by business investment and associated with a larger GBP 23.18 billion current account deficit.

The British Nationwide house price index rose just 0.2% in September, the third tepid monthly change in a row. On-year house price inflation of 2.0% was the lowest so far this year and down from 5.3% in the year to September 2016.

British consumer confidence printed a point higher in September at a 4-month high of minus 9, but the improvement was less than forecast.

The preliminary estimate of euro area consumer price inflation for September was unchanged at 1.5%, and the 1.1% core measure of inflation was at a 3-month low. Energy and food prices were respectively 3.9% and 1.9% higher than a year earlier.

German labor statistics once again were stronger than assumed. The jobless rate declined to 5.6% in September after printing at 5.7% in the four prior months. The number of unemployed workers fell 23K, more than four times as much as had been expected. Job vacancies increased another 11K, and employment in July-August was 1.6% greater than a year earlier.

German retail sales volume fell 0.4% in August, defying street expectations for a similarly-sized monthly rise. The July-August level was 0.5% less than the 2Q mean. Sales in August were 2.8% higher than a year earlier, however.

French consumer spending dipped 0.3% on month in August, slower the 12-month rate of increase to 1.2%.

French CPI inflation edged up 0.1 percentage point to 1.0% in September, while Italian consumer prices were 1.1% higher than in September 2016, down from a 1.2% on-year increase in August. The producer price inflation rates in August were 1.9% in France and 1.5% in Italy; both represented acceleration from July results.

Building permits in New Zealand leaped 10% on month in August.

Danish GDP grew 0.7% on quarter and 2.7% on year in 2Q.

Producer prices in the year to August rose 6.7% in Malaysia, 4.9% in Singapore, 3.0% in Cyprus, 2.4% in Hungary, and 1.4% in Austria but fell 6.0% in Iceland.

The second-quarter current accounts of India ($14.32 billion) and Austria (EUR 230 million) were both in deficit, while South Korea recorded a $6.06 billion current account surplus in August. South Korean industrial production rose 0.4% in August (2.7% on year), while retail sales fell by 1.0% on month and rose just 0.8% on year.

U.S. personal spending and income grew just 0.1% and 0.2% in August, and the personal consumption price deflators were each lower than forecast, with on-year increases of just 1.4% total and 1.3% on a core basis.

Canadian GDP growth flat-lined in July.

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


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