Equities Down and Bond Yields Rise Again

October 10, 2018

The dollar is comparatively steady, showing no net overnight change against the euro, yuan or sterling and upticks of 0.1% versus the Swiss franc, loonie and Australian dollar and of 0.2% relative to the Mexican peso. Somewhat bigger appreciations have occurred against the kiwi of 0.4% and yen of 0.3%.

Share prices fell 1.1 in South Korea and Singapore, 0.3% in New Zealand and 0.1% in Hong Kong but recovered 0.2% in China and Japan. In Europe, stocks have weakened 0.6% in France, 0.5% in Germany, 0.2% in Spain and 0.1% in Great Britain.

Ten-year sovereign debt yields have risen 2 basis points in the U.S. and Italy and by one basis point in the U.K. but are unchanged in Germany and a basis point lower in Japan.

There’s been little overnight change in the price of gold or oil. WTI crude is unchanged at $74.98 per barrel, but the Gulf Coast is bracing for Hurricane Michael, which is packing winds up to 140 miles per hour.

In the latest shift in the Trump Administration, UN Ambassador Nikki Haley resigned, effective at yearend.

Core domestic Japanese machinery orders unexpectedly leaped 6.8% in August following an 11% upsurge in July and were 12.6% higher than in August 2017. Public sector orders for machinery dropped 21.1% but had advanced 57.0% in July, and foreign orders posted back-to-back on-month increases of 6.0% in July and 7.8% in August.

On the other hand, the on-year increase of Japanese machine tool orders dropped further to 2.8% in September from 5.1% in August, 13.1% in July and 48.8% way back in January.

The British goods and services trade deficit doubled from GBP 572 million in July to a 3-month high of GBP 1.274 billion in August. The merchandise trade deficit (goods only) widened to GBP 11.195 billion from GBP 10.387 billion the month before.

British industrial production rose for a third straight month in August, although the 0.2% monthly uptick was smaller than those of 0.9% in June and 0.4% in July. On-year growth in both industrial production and factory output stood at 1.3% in the latest month. Construction output fell 0.7% on month and edged only 0.3% higher on year. British monthly GDP compiled by NIESR was unchanged in August. The latest 3-month over 3-month growth rate was 0.7%.

French industrial production grew less sharply in August (0.3% ) than in July (0.8%), but the 12-month rate of increase remained steady at 1.8%.

Italian industrial production, which had slumped 1.6% in July, rebounded by a stronger-than-forecast 1.7% in August, leaving the on-year rate of decline at only 0.8%.

The 12-month rise of Greek industrial production slowed in September to 1.4% from 2.0% the month before.

Several countries released price data. Consumer prices in the year to September advanced 5.0% in Romania, 4.8% in Mexico, 3.4% in Norway, 1.1% in Greece, and 0.6% in Denmark. Producer prices climbed 6.9% in Mexico and 21.1% in Norway.

Romanian GDP grew 1.4% on quarter and 4.2% on year in the second quarter.

South African business sentiment rebounded 3.1% in September from a 12-month low in August but remained 1.5% below July’s level.

The Westpac measure of Australian consumer confidence recovered 1.0% in October but was still 4.3% below July’s reading.

U.S. producer prices and Canadian building permits data will be released later today.

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

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