Commodity Prices Strengthen

October 16, 2017

West Texas Intermediate crude oil advanced 1.3% to $52.10 per barrel, and copper strengthened nearly 3%. Comex gold is 0.2% higher.

Comments over the weekend at the IMF meetings in Washington from the likes of Yellen, Zhou, and Constancio stressed that growth is doing well and expressed puzzlement that wage inflation continues to lag. BOJ Governor Kuroda felt that markets having adequately discounted geopolitical risk.

In Austria’s parliamentary election over the weekend, the nationalist Freedom Party moved ahead of the Social Democratic Party, signaling a likely shift away from a centrist coalition to a center-right one with a greater clampdown on immigration.

Spain’s Rajoy government is losing patience with Catalan separatists and plans to suspend self-rule there by the end of this week. The Spanish IBEX fell 0.7% in response.

In other European stock market action, equities have risen by 0.8% in Greece, 0.2% in Germany and Italy, 0.1% in the U.K. and France but fallen 0.2% in Switzerland and 0.1% in Austria.

Stock markets in the Pacific Rim advanced 0.7% in Hong Kong, 0.6% in Japan and India, 0.5% in Taiwan, and 0.4% in Indonesia but declined by 0.4% in China where released data showed greater-than-expected producer price inflation of 6.9% in September, up from 6.3% in August and 5.5% in both June and July. CPI inflation dipped by an as-expected 0.2 percentage points to 1.6% but was otherwise the most elevated since January.

The dollar is narrowly mixed, sporting a rise of 0.3% against the loonie, 0.2% versus the euro, yuan and Australian dollar and 0.1% vis-a-vis the Swiss franc. The dollar has also dipped 0.1% relative to the yen, kiwi and sterling.

The ten-year German bund edged down a basis point, while the 10-year British gilt yield firmed a basis point. The 10-year JGB is unchanged.

German wholesale price inflation rose to 3.4% in September, highest since April, from 3.2% in August and 2.2% in July. The energy component posted a 6.8% advance.

British house price inflation according to the Rightmove monthly index rebounded to 1.4% in October from 1.1% in September.

Euroland’s seasonally adjusted trade surplus widened 23% to an 8-month high of EUR 21.6 billion in August, as exports (+2.5%) expanded six times faster than imports. The year-to-date unadjusted surplus was EUR 27 billion smaller than a year earlier.

Danish PPI inflation picked up to 2.9% in September.

Turkish unemployment (11.2%) remained above 10% in August.

New Zealand’s services purchasing managers index fell 1.2 points in September, returning to July’s 3-month low of 56.0.

Japanese industrial production growth in August was revised downward marginally to a still robust 2.0% on-month increase. Capacity usage jumped 3.3%, while capacity stayed unchanged.

Indian WPI inflation slowed to 2.6% in September from 3.2% in August. Analysts had anticipated some acceleration, but the food component fell sharply.

The monthly U.S. Empire State manufacturing index will be reported today.

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



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