No Sino/U.S. Trade Deal, Falling Turkish Lira, and U.S. Jobs Day

May 4, 2018

U.S. Treasury Secretary Mnuchin has left Beijing with no agreement on trade. Investors wonder how soon tit-for-tat tariffs may follow.

The Turkish lira tumbled by more than 1% overnight, moving past 4.28/USD and bringing cumulative depreciation to almost 5% over the past four sessions. Turkey has double-digit inflation and an autocratic government that’s dissuading the central bank from tightening monetary policy sufficiently.

The U.S. Labor Department’s April report on jobs, unemployment and wage growth is due shortly.

A number of purchasing managers surveys were reported today.

The dollar is generally steady, with gains of 0.4% against the kiwi and peso and of 0.1% versus the loonie, Aussie dollar, yuan and sterling but dips of 0.3% relative to the yen and 0.1% vis-a-vis the euro. The Swiss franc is unchanged on balance.

Japan’s market was closed for Greenery Day. In other stock exchanges in the Pacific Rim, share prices fell by 1.1% in Indonesia, 1.0% in South Korea, 0.9% in Singapore, 0.8% in Hong Kong, 0.6% in Australia, 0.5% in India and 0.3% in China.

Share prices in Europe are up 0.5% in Germany and Italy, 0.4% in Spain and the U.K. but unchanged in France and down 1.0% in Greece.

The ten-year British gilt yield edged a basis point lower.

WTI oil is up 0.4%, whereas gold dipped 0.1%.

Retail sales in the euro area again underperformed market expectations. The volume of sales edged just 0.1% higher in March and was 0.8% above the year-earlier level. For the first quarter, sales dropped 0.2% compared to the prior quarter and increased 1.3% on year.

Euroland’s composite purchasing managers index slipped 0.1 point to a 15-month low of 55.1 in April, still suggesting GDP growth this quarter of about 0.5%.

Euroland’s services PMI printed at 54.7, an 8-month low. Service sector PMI readings dropped to a 19-month low in Germany, a 5-month low in Italy and a 4-month low in Spain but rose to a 2-month high in France and a 3-month high in Ireland.

India’s services and composite PMI scores in April rose to 3-month highs of 51.4 and 51.9, respectively.

China’s services and composite PMIs of 52.9 and 52.3 were at 2-month highs.

Singapore’s private purchasing mangers index climbed 1.9 points to a reading of 55.6 in April and showed record growth in exports.

Hong Kong’s private PMI, in contrast, swung below the 50 level that separates improving condition from worsening ones. Such printed at 49.1 and revealed sharply depleted inventories.

Standard Bank’s South African private PMI dropped 0.7 points to a 3-month low of just 50.4, suggesting near stagnation.

The Lebanese private purchasing managers index fell further below the 50 threshold to a 4-month low of 46.2.

France’s current account deficit widened to EUR 1.3 billion in March and tallied EUR 3.659 billion in the first quarter of 2018.

Spanish unemployment fell for a third straight month in April, and the drop of 86.7K jobless workers was the biggest in this streak.

The quarterly Monetary Policy Statement of the Reserve Bank of Australia anticipates tighter credit conditions ahead, as well as an acceleration of growth to 3.25% by the middle of this year and 3.55% by mid-2019. But inflation is seen not exceeding 2.25% until after mid-2020.

The Chilean monetary policy rate was left unchanged at 2.5%.

Filipino CPI inflation rose to 4.5% overall and 5.0% core in April.

U.S. labor market statistics and the Canadian IVEY-PMI index get released today.

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


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