Volatile Markets This Monday

October 29, 2018

Ahead of the important release of U.S. personal income, personal spending and the PCE price deflator, share prices fell 2.2% in China, 1.5% in South Korea, 0.5% in Hong Kong and 0.2% in Japan but are trading higher by 2.8% in Italy, 2.2% in India, 2.0% in Germany, 1.8% in the U.K., 1.7% in Switzerland, 1.1% in Greece and Australia and 1.3% in Spain.

German Chancellor Merkel announced that she is stepping down as CDU Party Chairwoman but hopes to remain chancellor until the scheduled 2021 federal election.

Regarding Italian debt, S&P did not follow Moody’s earlier ratings downgrade but instead left the euro area’s third largest economy with an unchanged debt rating. However, the outlook signal was changed to negative.

  • Italy’s 10-year sovereign debt yield dropped back 16 basis points, pulling other vulnerable euro area yields lower as well. Ten-year sovereign debt yields fell 9 basis points in Greece and 4 bps each in Spain and Portugal but rose 4 bps in German and 2 bps in the U.K., France and United States today.

There’s been yet more disastrous news around the world following the rash of bombs mailed to critics of President Trump. A mass shooting over the weekend at a Pittsburgh synagogue killing 11 people was the worst hate crime in U.S. history against the Jewish people. Then today comes news that a fairly new Boeing 737 aircraft crashed in Indonesia, presumably killing all 189 people on board.

The dollar is unchanged against the euro and Australian dollar, up 1.3% versus the Mexican peso, 0.5% relative to the yen, 0.2% against the Swiss franc and 0.1% vis-a-vis the loonie and yuan but down 0.3% against the kiwi and 0.1% versus sterling.

Among commodities, the prices of Comex gold and WTI oil are down 0.3% and 0.4%.

Japanese retail sales dipped 0.2% on month in September, dampening their 12-month rate of increase to 2.1% from 2.7% the month before.

Most countries in Europe returned to standard time yesterday. That turning back of the clocks by an hour reduced the time difference to 4 hours between London and New York and to 5 hours between Western Continental Europe and the U.S. east coast.

The Bank of England reported slower growth in M4 money last month as well as fewer mortgage approvals. British Chancellor Hammond delivers his budget later today. It’s expected to be less austere than others in recent years.

Austria’s manufacturing purchasing managers index slumped 1.2 points in October to a 25-month low of 53.8. Such posted its highest reading of 2018 (61.3) back in January.

Finnish consumer confidence recorded a drop to 16.8 this month from 20.2 in September. This was the fifth straight deterioration from a reading of 24.8 last May.

Italian PPI inflation accelerated 0.3 percentage points in September to 4.7%, highest since February 2012.

Icelandic CPI inflation edged up 0.1 percentage point to a 7-month high of 2.8% in October.

On-year growth in South African M3 money edged marginally higher to 7.00% in September, but the pace of private credit expansion slowed to a 2-month low of 6.26%.

In Singapore, PPI inflation settled back to a still lofty 12.1% on-year increase. Manufacturing producer prices went up 7.8%. Import price inflation was at 9.2%.

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



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