Continuing Move Into Riskier Assets
April 17, 2019
Share prices in Europe and Asia mostly rose. So did 10-year sovereign debt yields and the price of oil.
The dollar is unchanged on net against the yen and sterling. The greenback lost 0.5% against the Canadian dollar, 0.3% relative to the Australian dollar and yuan, 0.2% versus the euro and peso, and 0.1% against gold. The U.S. currency also strengthened 04% against the kiwi and 0.1% vis-a-vis the Swiss franc.
Ahead of the long Good Friday/Easter holiday, a considerable amount of data was released.
The U.S. goods and services trade deficit narrowed below $50 billion in February to an 8-month low of $49.382 billion. Such had been $55.7 billion a year earlier. The deficit with China was $9.7 billion smaller than in February, and the trade balance with OPEC swung from a $1.25 billion deficit in January to a $0.4 billion surplus in February.
Chinese real GDP advanced 1.4% in 1Q, the smallest quarter-on-quarter rise since early 2016, and this resulted in a second straight on-year increase of 6.4%. Economic growth in full 2018 had averaged 6.6%.
On-year growth in Chinese industrial production of 8.5% in March after 5.3% in February and 6.2% in 2018 easily beat analyst expectations. The 12-month rise of retail sales, 8.7%, was also greater than forecast but still marginally lower than 9.0% in 2018. Chinese business investment in the first quarter of of 2019 was 6.3% higher than a year earlier and compared favorably to a 5.9% rise in 2018. Lastly, the unemployment rate dipped 0.1 percentage point (ppt) in March to 5.2% following a 0.4 ppt jump in February.
Japan’s customs clearance trade surplus in March, JPY 529 billion, surpassed expectations but as a third smaller than the surplus in March 2018. In seasonally adjusted terms, moreover, the trade balance swung into the red by 178 billion yen.
Japan’s preliminary estimated rise of industrial production growth in February got halved on revision to just +0.7%, resulting in a 1.1% drop from a year earlier. Industrial capacity was unchanged in February for a second month in a row and 0.3% less than its year-earlier level. Capacity usage posted a February-over-February decline of 1.8%.
Data released for the euro area today showed:
- Headline CPI inflation in March of 1.4%, down from 1.6% in February and identical to the inflation rate in March 2018 in spite of a 5.3% on-year increase in energy. Core consumer price inflation of 0.8% was down from 1.0% in February and 1.1% in March 2018.
- Euroland’s current account surplus in February totaled EUR 15.5 billion on a nonseasonallky adjusted basis, EUR 26.8 billion seasonally adjusted. The non-adjusted surplus over the past dozen reported months equaled 2.9% of GDP, down from 3.3% in the prior 12 months.
- A EUR 19.5 billion seasonally adjusted trade surplus in February constituted a 16-month high. It was 12% wider than January’s surplus because imports (-2.9%) fell at twice the speed that exports (-1.4%) did.
The New Zealand dollar weakened overnight against most other currencies in reaction to first-quarter consumer price data that showed considerably lower inflation than assumed. The CPI went up just 0.1% versus 4Q18, depressing the on-year rate of inflation by 0.4 percentage points to a three-quarter low of 1.5%.
Even just a 0.2% uptick of the Westpac-MI index of Australian leading economic indicators in March was the biggest monthly rise since the previous April.
CPI inflation in Italy remained unchanged at 1.0% in March, but accelerated in South Africa by 0.4 percentage points to a 3-month high of 4.5%. South Africa also released February retail sales, which rose 0.5% on month and 1.1% from February 2018. March-on-March CPI inflation in Austria and Cyprus was 1.8% and 1.1%, respectively.
British consumer prices and producer price statistics for March were reported. CPI inflation stayed level at 1.9% instead of ticking 0.1 percentage point higher as anticipated. Core CPI inflation remained steady too at 1.8%. Producer output prices recorded a 12-month rise of 2.4% (2.2% among core items), and producer input prices were 3.7% above their year-earlier level. House price inflation according to the previously known Department of Communities and Local Government index contined to recede in February, falling to 0.6% from 1.7% in January, 2.2% in December, 2.7% in October-November and 3.2% last September.
Italy’s current account surplus of EUR 3.25 billion was a billion euros greater than its year-earlier level.
Canadian CPI inflation rose 0.4 percentage points to 1.9% last month due to a 6% monthly increase in the energy component. But core CPI continued to hover close to 2%.
Canada posted a C$ 2.895 billion merchandise trade deficit in February, 6% smaller than in January but 22% bigger than the February 2018 imbalance. Imports dropped 1.6% on month but outpaced on-year export growth by 4.2% to 3.3%.
The Federal Reserve Beige Book of regional economic conditions will be published this afternoon.
Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British CPI and PPI, Canadian CPI and trade, Chinese GDP, Chinese retail sales and industrial production, Euroland CPI and current account, U.S. trade balance
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