Investors Watching G20 Summit and Examining Today’s Load of Data

November 30, 2018

The dollar rose 0.7% against the euro overnight but just 0.1% relative to the yen and sterling.

Stocks dropped 1.6% in Australia and 0.8% in Indonesia and South Korea but climbed 0.8% in China, 0.5% in Hong Kong and 0.4% in Japan. Share prices in Europe are down 1.0% in the U.K. and 0.3% in Spain and Germany. U.S. equities are little changed.

Oil prices have relapsed almost 2% as November is drawing to a close. Gold is down 0.4%.

Ten-year U.S. Treasury and German bund yields are off 2 and 1 basis points. The Japanese JGB yield rebounded a basis point to 0.07%.

China’s manufacturing purchasing managers index printed at 50.0 in November, indicating no growth for the first time in over two years. The non-manufacturing PMI lost half an index point to 53.4.

Japanese industrial production climbed 2.9% in September but still posted a disturbing 1.3% quarter-on-quarter decline in 3Q. Japan’s jobless rate ticked back up to 2.4% in October after dipping 0.1 percentage point to 2.3% in September. Tokyo consumer prices posted on-year increases in November of 0.8% overall, 1.0% excluding just fresh food, and 0.6% excluding both perishable food and energy. Construction orders in October were 16.5% lower than a year earlier, and housing starts only increased 0.3%. Finally, Japanese consumer confidence edged down 0.1 point to a 23-month  low of 42.9 in November.

In the euro area, unemployment stayed at 8.1% for a fourth straight  month in October, while the youth jobless rate rose for a second straight time to 17.3%. Euro area consumer price inflation slipped 0.2 percentage points to a 3-month low in November of 2.0%, which was accompanied by a 1.0% core CPI rate.

Canadian real GDP growth slowed to a quarter-on-quarter annualized pace (SAAR) of 2.0% in 3Q versus 2.9% in 2Q. Slower consumer spending (1.2% SAAR after 2.3% SAAR in the prior quarter) was the main drive of this slowdown. On-year GDP growth of 2.1% was down from 2.4% in the  previous quarter. Monthly GDP for September contracted 0.1% and was just 2.1% above its year earlier value, as industrial production and energy posted monthly drops of 0.6% and 1.4% in September.

Canadian producer price inflation decelerated 1.0 percentage point to a 5-month low of 5.3% in October.

Revised on-year GDP growth was reported for several other economies including India (7.1%), Denmark (2.0%), Poland (5.1%), the Czech Republic (2.4%), Portugal (2.1%), Brazil (1.3%), Belgium (1.6%), Italy (a 14-quarter low of 0.7%), Finland (2.4%) and Austria (2.2%).

The volume of German retail sales recorded a fourth straight month-on-month decline — this time of 0.3% in October. On-year German import price inflation printed at 4.8% in October for the third time in the last four months. Export prices (2.0%) went up less than  half as much.

Italian CPI inflation hit a 31-month high of 1.7% in November. Core CPI (0.9%) was at a 17-month high, and Italy’s 10.6% jobless rate in October was at a 4-month peak.

The KOF Swiss index of leading economic indicators slid 1.1 points to a 3-month low in November.

Britain’s Nationwide measure of house price inflation accelerated 0.3 percentage points to a 3-month high of 1.9% in November. The GFK measure of British consumer confidence, meanwhile, printed 3 index points lower in November at an 11-month low.

Australian private credit and M3 money expanded by 4.6% and 1.9% during the twelve months through October. New Zealand consumer confidence rebounded 2.8% this month after falling nearly 2% in October.

South Korean industrial production and retail sales were 10.7% and 5.0% higher in October than a year earlier. South Korean monetary policy was tightened today.

Turkey’s trade deficit of $456 million in October was the smallest monthly gap since early 2001, and the year-to-date deficit of $51.6 billion was 15.7% smaller than a year earlier.

A South African trade deficit in October of ZAR 5.55 billion, however, was the largest shortfall in nine months.

And Spain’s EUR 2.93 billion current account surplus in January-September was down from EUR 11.1 billion a year earlier.

French producer price inflation ticked up to 3.6% in October and included the fastest on-year rise in domestic producer prices (3.9%) since the first month of 2017. French CPI inflation slowed 0.3 percentage points to 1.9% in November.

The Bank of Koreas benchmark interest rate has been raised by 25 basis points to 1.75%. This was the second such  increase of the cycle following an initial tightening in November 2017, which had been the first hike since 2011. In between, there were five 25-basis point cuts from March 2014 to June 2016. A statement from the Policy Board does not suggest any urgency to enact a third increase very soon.

As it is forecast that inflationary pressures on the demand side will not be high for the time being, and that the domestic economy will sustain a rate of growth that does not diverge significantly from its potential level, the Board will maintain its accommodative monetary policy stance. In this process it will judge whether it is necessary to adjust its accommodative monetary policy stance further, while closely checking future economic growth and inflation trends. It will also carefully monitor conditions related to trade with major countries, any changes in the monetary policies of major countries, financial and economic conditions in emerging market economies, the trend of increase in household debt, and geopolitical risks.

Group of Twenty political leaders begin their annual summit in Buenas Aires today. U.S. trade talks with China are being watched particularly carefully.

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



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