Some Weak Data from Japan and Germany and No End to U.S. Government Shutdown

January 8, 2019

Consumer confidence in Japan ended 2018 at a 25-month low.

A 1.9% plunge in German industrial production in November has raised the risk of a second consecutive quarterly contraction of real GDP in Europe’s largest economy. GDP fell 0.2% in the third quarter, and industrial output posted back-to-back month-on-month declines of 0.8% in October and 1.9% in November. November’s plunge was the biggest in 51 months and left output 4.3% lower than a year earlier. Output contracted in this latest month in all major groups.

Economic sentiment in the euro area fell 2.2 points, twice as much as expected and to  a 25-month low of 107.3. All components of the index weakened in December. The business climate index of the joint-currency area was 0.82, down from 1.04 in November and lowest since March 2017.

Swiss retail sales volume rose 0.2% in November but was 0.5% lower than a year earlier.

There’s been no breakthrough in the border wall funding standoff between President Trump and Congressional Democrats, and the resulting federal government shutdown is threatening to depress first-quarter U.S. growth.

The dollar hasn’t reacted much to these developments. The currency is unchanged versus the yuan, Swiss franc, and sterling and shows changes not exceeding 0.2% against other major currencies.

Share prices rose 0.8% in Japan but fell 0.6% in South Korea and 0.3% in Taiwan and China. Equities are trading mostly firmer in Europe.

Ten-year German, British and Japanese sovereign debt yields climbed 2 basis points.

Among commodities, the price of gold is quoted 0.4% lower, while WTI oil is up by 0.4%.

The French current account deficit ballooned from EUR 252 million in October to a 5-month high of EUR 2.756 billion in November.

The South Korean current account fell to a 7-month low in November of $5.06 billion, but the year-to-November surplus of $30 million is little changed from a $70 million deficit a year earlier.

The British Halifax house price index slipped 0.4% last quarter despite a robust 2.2% increase in December. There was an on-year rise of 1.3% in the fourth quarter.

Industrial production in the year to November advanced by 3.5% in Hungary and 1.5% in the Czech Republic.

Dutch CPI inflation held steady in December at 2.0%.

Norwegian industrial production dropped 1.5% on month in November, cutting the 12-month rate of rise nearly in half to 2.6%.

Australia’s trade surplus narrowed to a 4-month low of A$ 1.925 billion in November, having touched a 19-month high of A$ 2.94 billion just two months earlier.

Atlanta Federal Reserve President Bostic now expect just a single hike this year of the federal funds rate.

Several U.S. data releases are scheduled today: the trade balance, the Labor Department’s JOLTS index, and small business sentiment. Canada will be reporting trade data, and Romania’s central bank is holding a monetary policy review.

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

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