Brexit and Tariff Man Leading the Overnight News

April 9, 2019

A decision is needed tomorrow on whether and how long to grant Britain another extension on Brexit talks. In the meantime, Prime Minister May today will be holding talks with her German and French counterparts. She wants a short extension to June 30th but seems no closer to forging a parliamentary coalition behind any plan.

Trump is a again fomenting anxiety both domestically and with former U.S. allies. The president wants to get rid of more top homeland security officials, which has top congressional Republican figures very concerned. Trump is also threatening to impose higher tariffs on $11 billion of EU goods in retaliation against Airbus subsidies.

The dollar overnight slipped by 0.2% against the yen and sterling and by 0.1% versus the euro, loonie, and kiwi, but the U.S. currency remains unchanged relative to the Swiss franc, Aussie dollar, Chinese yuan and Mexican peso.

Share prices in the Pacific Rim advanced 0.7% in India, 0.9% in Indonesia, 0.6% in Hong Kong, and 0.5% in Taiwan but only 0.2% in Japan. Markets in China and New Zealand slid 0.2%, but equities in Europe show gains so far today of 0.7% in Spain, 0.8% in Switzerland, 0.3% in the U.K. and France, 0.5% in Italy and 0.2% in Germany.

Commodity prices continued to climb overnight, with WTI oil advancing 0.4% and gold 0.3%.

Ten-year German bund, British gilt and Japanese JGB yields are steady.

Only second-tier data have been released today:

  • Indonesian retail sales posted a 26-month on-year advance of 9.1% in February.
  • Italian retail sales edged up 0.1% on month and 0.9% on year in February.
  • The British BRC’s estimate of same-store sales recorded their fourth year-on-year decline in five months during March, a slide of 1.1% versus a 0.1% dip in February.
  • The 12-month rate of increase in Greek industrial production slowed to 2.3% in March from 4.2% in February.
  • Hungarian CPI inflation accelerated 0.6 percentage points to a 5-month high of 3.7% in March.
  • Romania’s January-February trade deficit was 45% wider than a year earlier, but Finland’s trade balance for those months swung to a EUR 450 million surplus from a EUR 595 billion deficit a year earlier. Austria’s January trade deficit was almost twice the size of a year earlier. Cyprus ran a EUR 657 billion trade deficit in the first two months of 2019.
  • U.S. small business sentiment remained on a plateau in March according to the NFIB index, printing 0.1 index point higher at 101.8 after 101.7 in February. Sentiment had earlier plunged from 108.8 in August to 107.4 two months later and 101.2 in January.

The Executive Board of the National Bank of Serbia retained a 3.0% key policy rate at its latest review. Such as been at that level since a pair of 25-basis point hikes in March and April of last year. A released statement asserts than inflation (2.4% overall and 1.2% core) continues to track a path in line with what officials had been assuming. Policy caution is warranted because of an uncertain international environment.

The U.S. IPD/TIPP Optimism index and the JOLTS index of labor market hiring and separations will be released today. Several Mexican economic indicators (CPI, trade, and PPI) arrive today as well. Fed Vice Chairman Clarida speaks publicly.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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