Lots of Data Released and Mostly on the Softer Side

May 15, 2018

The dollar strengthened across the board overnight, rising 0.7% against the peso, 0.4% relative to the euro, Aussie dollar and yuan, 0.3% versus the yen and sterling, and 0.2% vis-a-vis the Canadian dollar, Swiss franc and kiwi.

Equity markets in the Pacific Rim mostly fell, a 0.6% rise in China being the main exception. Share prices lost 1.8% in Indonesia, 0.9% in Hong Kong, 0.7% in South Korea and Taiwan, 0.6% in Australia and Singapore, and 0.2% in Japan and New Zealand. Stocks also have dropped 0.4% in Spain and Greece but are up 0.4% in Italy, 0.3% in the U.K., 0.2% in France and 0.1% in Germany. The Swiss market is unchanged.

Ten-year sovereign debt yields advanced two basis points each in Germany, the U.K., and U.S. futures and by one basis point in Japan.

The WTI oil price climbed 0.9% to $71.56 per barrel amid price expectations of continuing appreciation. Comex gold fell by 0.8%  to $1,307.30 per troy ounce.

A pronounced slowdown of GDP growth in the euro area last quarter to 0.4% was confirmed. This followed three straight quarters in which GDP climbed 0.7% and depressed the on-year rate of growth to 2.5%, a three-quarter low.

The three largest economies in the common currency area — Germany, France and Italy — experienced first quarter-over-fourth quarter GDP growth of 0.3% and respective year-on-year growth of 2.3%, 2.1% and 1.4%. In Germany, exports, government expenditures and imports contracted, and personal consumption rose only slightly. Business spending on machinery and equipment and construction advanced markedly.

Euroland’s fourth biggest economy, Spain, showed resilience last quarter, posting a third straight 0.7% quarterly rise in GDP, but the on-year growth rate still subsided 0.2 percentage points to 2.9%.

Within the euro area, quarterly GDP growth rates slowed to 0.5% from 0.7% in The Netherlands, to 0.4% from 0.5% in Belgium, to 0.8% from 1.1% in Cyprus, to 0.4% from 0.7% in Portugal, and to 0.7% from 0.9% in Austria, but GDP growth in Finland accelerated to 1.1% from 0.7%.

According to the ZEW Institute’s monthly measure of investor sentiment, confidence in the German economy remained at a weak negative reading of -8.2 in May, depressed by fears of a trade war, concerns about rising oil prices and worries over the U.S. abrogation of the Iran nuclear deal. The ZEW expectations index has a long-term average value of +23.4 and was a firm as +20.4 in the first month of this year. The ZEW expectations index for the whole euro area printed at +2.4, up 0.5 on month but down from 31.8 in January.

After three straight monthly declines in Euroland industrial production of 0.1% in November, 0.6% in December and 0.9% in January, such rebounded by a smaller-than-forecast 0.5% in February.

First-quarter versus 4Q17 growth in the Czech Republic (0.5%), Hungary (1.2%), Denmark (0.3%), Great Britain (0.1%) and Romania (0.0%) was also slower than growth in the final quarter of last year.

Japan’s tertiary index, a monthly measure of service sector activity, fell 0.3% in March and by 0.1% in the first quarter. A 0.8% increase in the index from a March 2017 matched the average rise in 2017 as a whole.

British jobless insurance claims doubled to 31.2K last month.  Average weekly earnings (2.6% on year in the first quarter) slowed a bit due to weaker bonuses. The ILO-basis jobless rate remained at 4.2%.

Chinese retail sales in April were 9.4% higher than a year earlier, matching the rise in January-February but down from 10.1% in the year to March. Fixed asset investment also grew more slowly in April than in the first quarter. Industrial production, on the other hand, posted a larger-than-expected 7.0% rise from a year before.

The Swiss combined PPI/import price index accelerated to a monthly 0.4% increase in April, lifting the on-year advance by 0.7 percentage points to 2.7%.

French CPI inflation stayed level at 1.6% in April. Polish CPI inflation accelerated 0.3 percentage points to 1.6%, and Danish PPI inflation ticked up to 2.8% from 2.7%.

South Africa recorded unemployment of 26.7% last quarter, and Turkish joblessness was at 10.6% in March.

Minutes from the Reserve Bank of Australia‘s May meeting suggest that interest rates won’t be changed soon but that the next adjustment of the official cash rate is more likely to be upward than downward.

Scheduled U.S. data releases today feature retail sales and included the Empire State manufacturing index, the National Association of Home Builders index, and Treasury-compiled capital flows. Canada will be reporting existing home sales.

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

Tags: , , ,


Comments are closed.