Dollar and Sovereign Debt Yields Rise, while Equities Slip Further
October 9, 2018
Markets remain risk averse today.
- The dollar appreciated 0.4% against the euro, 0.3% versus the loonie, peso and kiwi, 0.2% relative to the Swiss franc, Aussie dollar, and sterling, and 0.1% vis-a-vis the yen.
- Share prices fell 1.3% in Japan, 1.0% in Australia, 0.7% in New Zealand, 0.6% in Indonesia, and 0.5% in Singapore and India. South Korea’s market was closed for Hangul Day.
- European equities have fallen 2.6% in Greece, 0.7% in Germany, 0.8% in Switzerland and 09.5% in the U.K. and France.
- 10-year sovereign debt yields have climbed 5 basis points in Italy, 3 bps in Spain, Portugal and the U.K., and 2 bps in Germany, France and The Netherlands. The 10-year Japanese JGB yield edged up another basis point to 0.15%.
- Gold continues to trade below $1,200 per ounce at $1,189.20. But WTI oil firmed 0.5%.
The IMF released a new World Economic Outlook, revising down projected real global GDP growth by 0.2 percentage points each to 3.7% for 2018 and 2019.
In the United States, momentum is still strong as fiscal stimulus continues to increase, but the forecast for 2019 has been revised down due to recently
announced trade measures, including the tariffs imposed on $200 billion of US imports from China. Growth projections have been marked down for the euro area and the United Kingdom, following surprises that suppressed activity in early 2018. Among emerging market and developing economies, the growth prospects of many energy exporters have been lifted by higher oil prices, but growth was revised down for Argentina, Brazil, Iran, and Turkey, among others, reflecting country-specific factors, tighter financial conditions, geopolitical tensions, and higher oil import bills. China and a number of Asian economies are also projected to experience somewhat weaker growth in 2019 in the aftermath of the recently announced trade
measures.
Germany’s current account surplus hardly rebounded in August, widening just EUR 0.2 billion to EUR 15.3 billion versus EUR 22.5 billion per month in the first half of 2018. The seasonally adjusted merchandise trade surplus averaged EUR 17.1 billion per month in July-August versus EUR 20.3 billion in the first half of this year and EUR 20.4 billion per month in 2017.
Japan’s current account surplus of JPY 1.838 trillion in August was 23.4% smaller than the surplus in August 2017. The seasonally adjusted trade surplus narrowed 3.8% from July to August as imports grew 2.2% on month but exports rose only 0.4%.
Japan’s economy watchers index edged down 0.1 point to a 2-month low of 48.6 last month, and Japanese bankruptcies, which had posted an 8.6% on-year rise in August, fell 8.5% on-year in September.
British same store sales in September were 0.2% lower than a year earlier, and sales in August-September showed no on-year net movement.
Switzerland’s jobless rate was 2.4% in September for a fifth consecutive month.
Czech CPI inflation slowed 0.2 percentage points to 2.3% in September.
Denmark’s current account surplus fell sharply to a 4-month low of DKK 9.118 billion in August. Such was also below the year-earlier surplus of DKK 14.4 billion.
The NAB indices of Australian business confidence and business conditions respectively rose a point to 6 and remained unchanged with a reading of 15 in September.
Canadian housing starts of 188.7K in September were at the lowest level so far in 2018.
The NFIB measure of U.S. small business sentiment fell back to July’s reading of 107.9 after rising to 108.8 in August.
Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: German current account, IMF World Economic Outlook, Japanese current account, U.S. small business sentiment