Fragile Market Conditions

February 12, 2018

Stocks rose, and the ten-year Treasury yield of 1.84% is five basis points below the recent peak. However, the rhetoric of comments about the market sounds unconvinced that last week’s extreme turmoil is out of the system. 

The DOW at this hour shows a rise of 0.8%, but the S&P 500 is only 0.3% firmer. Stocks rose 0.9% in South Korea and India and 0.8% in China. In Europe so far, stocks are up at least 1.0% in the U.K., Germany, France, Switzerland and Spain. Japanese markets were closed observing Founders Day. Carnival has begun in Brazil.

The British 10-year gilt yield is a basis point firmer. Its German counterpart is unchanged.

A 1.3% rise in West Texas Intermediate crude oil is one of the more notable market developments today. Comex gold has firmed 0.7%.

The dollar has slid 0.3% against the yen, 0.2% versus the Australian dollar and 0.1% vis-a-vis the peso. The dollar is unchanged against the Swiss franc and up 0.4% relative to the yuan, 0.2% versus the  kiwi and loonie, and 0.1% against sterling.

U.S. President Trump delivers his budget proposals today, which are believed to boost spending on the military, the wall, other immigration control and infrastructure but deep cuts in other non-defense spending. VP Pence in South Korea indicated some willingness to engage in talks toward a diplomatic solution with North Korea.

The Bank of Russia implemented a 25-basis point cut of its main interest rate to 7.5%. In 2017, six reductions totaling 225 basis points from 10% to 7.75% were engineered.

Chinese new yuan lending in January rebounded sharply to CNY 2.9 trillion from 584 billion yuan in December. On-year money growth of 8.6% in M2, 15.0% in M1 and 13.8% in M0 beat expectations.

Swiss CPI inflation edged lower to 0.7% in January. There was a monthly dip of 0.1%.

CPI inflation in India eased more than forecast to 5.07% in January.

Danish and Portuguese CPI inflation also fell to a 7-month low of 0.7%  and a 6-month low of 1.0%, respectively.

Industrial production grew December-0ver-December by 7.1% in India and 12.2% in Romania.

Ireland’s construction PMI climbed 3.4 points to an 8-month high of 61.4 in January, led by commercial real estate. Consumer confidence in Ireland leaped 7.2 points to 110.4 in January, its highest reading since February of 2001.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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