Stampede Out of Risky Assets
December 6, 2018
Japan’s Nikkei fell 1.9% overnight, and share prices are down even more sharply in the United States, Canada, U.K., Germany, France, Spain, China, Hong Kong.
10-year sovereign debt yields have climbed 14 and 10 basis points in Italy and Greece but fallen 8 bps in the U.K., 7 bps in the U.S., 5 bps in Germany and 1 basis point in Japan.
West Texas Intermediate crude oil has plunged over 4.0%. Gold is up 0.4%.
The dollar fell 0.8% against the yen, 0.6% versus the Swiss franc, 0.4% relative to sterling, 0.3% vis-a-vis the euro and 0.2% against the peso, while rising 0.7% against the Aussie dollar, 0.4% relative to the yuan and 0.3% against the loonie.
U.S.-Sino trade tensions took a very bad turn after the United States engineered an arrest of a top Chinese technology firm official. Meanwhile, the Federal Reserve Beige Book released yesterday revealed nothing to suggest that rate normalization is still a “go.”
Revelations in today’s big batch of U.S. economic data release were as follows:
- The U.S. goods and services trade deficit widened further in October, bring the year-to-date imbalance to $502.74 billion, 11.2% greater than a year earlier. Merchandise trade positions with China, Japan, Germany, and Opec all deteriorated between September and October.
- New U.S. jobless insurance claims averaged 228K per week over the latest four-week period versus 213.75K in the previous four weeks and 208K in the four weeks through September 8th.
- Factory orders fell 2.1% in October after a mere 0.2% uptick the month before.
- ADP’s estimated private-sector employment increase last month was 179K, 46K less than in October.
- Labor productivity rose 2.3% last quarter and matched the second quarter’s year-on-year advance of 1.3%.
- The quarterly advance of unit labor costs last quarter was revised down 0.3 percentage points to a sub-1% 0.9%. Such had climbed 2.2% on average in 2017.
- The Institute of Supply Management’s non-manufacturing U.S. purchasing managers index rose 0.4 index points to a robust 2-month high of 60.7 last month, led by much faster improvement in orders and business activity.
A top official of the Reserve Bank of Australia said a rate hike there is some way off and expressed concerns about banking behavior.
The National Bank of Serbia kept its key policy rate unchanged at 3.0%, the level since a trio of cuts totaling a percentage point between October 2017 and April 2018. Inflationary pressure is deemed “low” despite robust growth.
German industrial orders rose only 0.3% in October because of a 3.2% slump in domestic demand. Overall orders recorded a larger on-year decline of 2.7%.
Germany’s construction purchasing managers index climbed back above the 50 improvement versus deterioration barrier to a 3-month high of 51.3 in November.
The Egyptian, Saudi, and U.A.E. non-oil PMIs rose to 3-, 4- and 4-month highs last month of 49.2, 55.2. and 55.8, respectively.
Australian retail sales rose 0.3% in October and matched September’s 3.5% 12-month rate of increase. Australia’s trade surplus narrowed 22% from September to October, but the year-to-date surplus of A$ 17.6 billion was 49% bigger than a year before.
The Canadian trade deficit of C$ 1.165 billion in October was larger than the prior month’s shortfall but less than a deficit of C$ 1.379 billion in October 2017. Exports and imports each contracted on month but exceeded year-earlier levels by 10.4% and 9.6%. A separate Canadian release showed a 4.6-point drop in the IVEY-PMI index to 57.2, the second lowest reading in the past 10 months.
In the year through November, Dutch and Cypriot consumer prices rose by 2.0% and 2.9%. Russian consumer price inflation accelerated to a 16-month high of 3.8% last month.
Consumer confidence improved in Indonesia to a 4-month high in November.
South Africa’s current account deficit widened a bit to 3.5% of GDP last quarter.
Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: German orders, U.S. and Canadian trade balances, U.S. productivity and unit labor costs
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