Upbeat Tone to Tuesday’s Data Reflected in Stocks and Bonds

April 16, 2019

Share prices rose 2.4% in China, 1.2% in Hong Kong, 1.0% in India, 0.8% in New Zealand, 0.7% in Indonesia, and 0.2% in Japan. Stocks in Europe show gains of 0.7% in both Germany and Switzerland and 0.4% in Great Britain.

Ten-year U.S. Treasury and German bund yields advanced another basis point, and the dollar is narrowly mixed. Gold slipped 0.4%.

Chinese house price inflation rose 0.2 percentage points to a 23-month high in March of 10.6%. That’s more than double the on-year advance of 4.7% recorded last April-May.

The German ZEW expectations index of investor sentiment toward Europe’s largest economy improved 6.7 index points to a 13-month high of +3.1 in April. That up from a low reading last October of -24.7 but still well down from this measure’s long-term average of +22.2. Moreover, current conditions again moved south, dropping to a reading of 5.5 from 11.1 the month before. The good news is that the global slowdown doesn’t appear as pronounced a feared, and Brexit’s postponement gave another lift to confidence. That said, the picture remains fragile overall.

The ZEW expectations report for the whole euro area mirrored the developments regarding Germany. Expectations rose 7.0 index points to +4.5, but the current situation fell from -6.6 in March to an April reading of -13.2.

A big surprise emerged in construction output in Euroland, which shot up 3.0% in February instead of the projected 0.3%. This produced a 5.2% increase compared to the February 2018 level. Set against a 0.1% on-year dip in January, the two-month average on-year increase still easily beat a 1.8% increase recorded in the final quarter of 2018.

The monthly batch of British labor statistics were mixed. New jobless insurance claims went up 28.3K in March and were associated with a 0.1 percentage point uptick in the claimant-basis unemployment rate. But the ILO-basis unemployment rate was steady at 3.9% in February, which is down from 4.0% last November-December. Also, on-year growth in average wage earnings remained above 3% at 3.4% overall and 3.5% for regular pay that excludes bonuses.

The United States attracted an abundant net capital inflow in February that exceeded $30.0 billion, according to the Treasury Department’s monthly TIC data release.

Central bankers continue to take a very patient approach to monetary policy. Minutes from this month’s Reserve Bank of Australia Board meeting laid out some conditions for a possible cut (continuing low inflation or rising unemployment) and projected no near term rise of the official cash rate in any case. Also, Chicago Fed President Evans revealed a tolerance for above-target inflation at least for a while and said rates may not need a further boost for another year and a half.

On-year declines in Turkish industrial production of 5.1% and retail sales of 4.9% in February were small than those in January and well short of December-over-December slides of 9.9% and 8.8%, respectively.

Czech PPI inflation rose 0.2 percentage points to a 4-month high in March of 3.8%.

Ireland recorded a EUR 13.2 billion trade surplus in January-February, 38.5% wider than a year earlier.

Japan’s tertiary index, a monthly gauge of service sector activity fell more sharply than forecast in February. The 0.6% drop reversed all of January’s increase and left the index just 0.9% above its year-earlier level. The tertiary index had risen 0.7% in 2016, 0.8% in 2017, and 1.1% in 2018.

French officials are promising to rebuild the damaged iconic Notre Dame Cathedral and are soliciting donations from around the world in the effort.

U.S. industrial production and the NAHB housing market index get reported today.

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




Comments are closed.