The Contrast of a Continuing U.S. Political Impasse and an Important Success in Germany

January 22, 2018

The U.S. government shutdown since midnight Friday entered its third day. A senate vote planned initially for late Sunday was moved back to noon today. The rift is primarily over immigration law but with deepening rifts over class, race, ancestral identity, gender, and between generations.

In Germany at a special convention of the Social Democratic Party, delegates voted 362-279 in favor of authorizing their leadership to move forward with Chancellor Merkel’s CDU-CSU to form a “grand coalition.” This approval avoids the need for snap elections and will be essential for enabling the European Union to address key issues in a united way during coming months.

The euro, loonie, and kiwi have advanced 0.3% against the dollar so far this Monday, and the Swiss franc, sterling and the Aussie dollar are 0.2% firmer. The yen, yuan and peso are unchanged, however.

Share prices in the Pacific Rim rose 0.8% in India, 0.7% in New Zealand and Taiwan, 0.5% in Singapore, and 0.4% in China, but such lost 0.7% in South Korea and closed unchanged in Japan. European stocks have risen 0.5% in Spain, 0.3% in Italy, and 0.1% in Germany and Great Britain but show no net movement in Switzerland or France.

The 10-year sovereign debt yields in the U.K. and Germany edged up two and one basis points, respectively, while the Japanese JGB is holding steady at 0.07%. There’s been scant overnight movement in gold or oil prices.

Producer price inflation during December held steady in Ireland at negative 3.6% and fell in South Korea to 2.3% from 3.1%.

The British Rightmove house price index posted a 1.1% on-year increase in January 2018. That is only a third as much as the 3.2% advance over the 12 months to January 2017.

Dutch consumer sentiment continues to show a high level of confidence. The index dipped a point to a reading of 24 in January, which is a two-month low. The index had doubled in value from 13 in January 2017 to a 122-month peak of 26 by April. It’s been more or less level over the past nine months, including another score of 26 last August.

Norwegian industrial confidence doubled from a reading of 3 in the third quarter of 2017 to 6 in the year’s final quarter.

North American data being released today include the Chicago Fed National Activity index, Mexican unemployment, and Canadian wholesale turnover. There is a Eurogroup meeting today. The Bank of Japan Board began a two-day policy review today, and the World Economic Forum in Davos, Switzerland starts tomorrow.

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



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