U.S. Share Prices Open Higher as Wednesday’s FOMC Decision Nears

December 18, 2018

The dollar is narrowly mixed with tiny downticks of 0.2% against the euro and yen and 0.1% relative to the Swiss franc, Aussie dollar and sterling offset by gains of 0.7% versus the kiwi and 0.5% against the peso.

Stocks in the Pacific Rim tumbled 1.8% in Japan, 2.2% in Singapore, 1.4% in Hong Kong, 1.2% in Australia and 0.8% in China. But European equities are down more moderately, and U.S. markets opened higher after President Trump again urged the Fed not to raise interest rates again.

Ten-year sovereign debt yields dipped a basis point in the United States, Japan and Germany.

The most significant market move today has been a further 1.5% slide in West Texas Intermediate crude oil to $49.14 per barrel.

Minutes from the Reserve Bank of Australia’s December policy review, which kept the Official Cash Rate unchanged at a record low of 1.5%, found no good reason to change the policy stance yet and observed that if the recent drop in oil prices is sustained, global inflation will be lower than thought previously.

The Central Bank of Hungary’s final policy review of 2018 resulted in an unchanged Base Rate of 0.90% and no change to the overnight deposit rate of minus 0.15%. Those central bank rates have been at these levels since May 2016 and September 2017, respectively. A released statement foresees a gradual, cautious, and data-guided normalization of rates in the future. Core inflation has strengthened, but total inflation is expected to lie below 3% from next spring onward.

It’s been a light day from a data release standpoint. The main indicator out today is the German IFO Institute’s monthly business climate index for December that shows greater-than-forecast deterioration in current conditions and expectations. The sub-index for construction remained at November’s 4-month low, while manufacturing, services and retail all recorded weaker readings.

U.S. housing starts rebounded to a 3-month high in November but were 3.6% lower than their year-earlier level. Building permits climbed to a 7-month high and were up 0.4% on year.

A 7.5% plunge in Turkish retail sales from a year earlier in October was the greatest on-year drop in at least a dozen years and contrasts with an 8.2% year-over-year rise as recently as April.

New home sales in Australia increased 3.6% on month in November to a 5-month high.

And New Zealand’s business confidence index had a higher but still negative 24.1 reading in October after -37.1 in September and August.

The Swiss government’s winter forecast revised projected Swiss growth next year down a half percentage point to 1.5% and projected CPI inflation down 0.3 percentage points to merely 0.8%.

U.S. Treasury-compiled capital flow data show another ample long-term inflow of $31.3 billion in October. That followed net inflows of $30.8 billion in September, $131.7 billion in August, and $66.6 billion in July.

Manufacturing sales in Canada dipped 0.1% in October but had risen in four of the prior five months. Nominal sales were 8.0% greater than in October 2017.

Hong Kong unemployment was at 2.8% for an eighth straight month.

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

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