Monetary Policy Reviews, an Intensifying U.S. Political Crisis, Trade Talks, and Some Data Surprises

May 8, 2019

Central bank officials in New Zealand and Malaysia cut their interest rates, while those in Thailand maintained an “accommodative but appropriate” 1.75% rate level. Thailand’s growth outlook was revised downward, but the inflation prognosis wasn’t changed. New Zealand’s official cash rate was lowered 25 basis points to 1.5%. Such had been 1.75% since November 2016. Malaysia’s overnight policy rate was cut to 3.0% from 3.25%, reversing an increase made in January 2018.

Congress is moving toward charging Attorney General Barr with contempt of congress for obstructing the release of the Mueller investigation, and the New York Times published an investigative piece into President Trump’s tax figures that suggests that no American may have lost more money than he during the decade through 1994.

China’s reported trade surplus abruptly and conveniently collapsed 58% on month and 47% on year in April to $13.84 billion. Imports were 4.0% greater than a year earlier, whereas exports fell 2.7% on such a basis. In spite of this news, the year-to-date surplus equaled $90.16 billion, up from $70.94 in the first four months of 2018.

High level U.S.-Sino trade talks are proceeding this week despite intensifying tension between the two governments. There’s a risk that tariffs will jump at week’s end if no deal is struck, but stocks in Europe and North America stabilized after yesterday’s bloodbath on hopes that an agreement will emerge at this eleventh hour. The reduced Chinese trade surplus in April probably will not assuage the U.S. side, which is pushing for much broader Chinese concessions.

Although German industrial production growth of 0.5% in March beat expectations for a 0.5% slide, output was 0.9% less than a year earlier. Production also increased 0.5% on quarter in 1Q.

The dollar strengthened 0.5% against sterling but is only marginally changed against the other major currencies.

Share prices in Asia fell more then 1.0% in Japan, China, Hong Kong, and India, but markets in the U.S., Germany, and France are slightly higher.

The ten-year British gilt yield dropped 3 basis points, and its U.S. and German counterparts are a basis point lower. WTI oil rebounded 1.0%. Gold is little changed.

The 12-month percentage increase in the U.K. Halifax house price index nearly doubled to 5.0% in April from 2.6% in March and 1.3% last December. Same-store sales in the U.K. posted a 3.7% on-year advance, most in the past 23 months.

Japan’s composite purchasing managers index rose 0.4 points to a 3-month high of 50.8. The manufacturing PMI had climbed a full point to 50.2, while the services PMI dipped 0.2 points to 51.8. Year-on-year growth in Japan’s monetary base, over which monetary policy exerts most direct control, slowed to 3.1% in April from 4.4% in the first quarter, 7.3% in 2018 and 17.0% in 2017.

South Korea’s $11.15 billion current account surplus last quarter was only 4.3% smaller than a year earlier.

Swiss unemployment held steady at a 2.4% seasonally adjusted rate in April.

Norwegian industrial production posted a third straight year-on-year drop in March, this time of 6.5% after declines of 5.7% in February and 3.4% in January.

Canadian housing starts picked up to a 235.5k pace in March from 193k in the prior month.

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



Tags: , , , ,


Comments are closed.