Equities and Dollar Mostly Firmer

May 21, 2019

Share prices in the Pacific Rim rose 1.2% in China, 0.8% in Indonesia, 0.6% in Taiwan, and 0.4% in Australia, but the Japanese Nikkei closed down 0.1%. stocks in Europe have so far risen today by 1.1% in Germany, 0.8% in the E.K. 0.7% in Italy, 0.6% in France, 0.5% in Switzerland, and 0.3% in Spain. U.S. futures are up, too.

The dollar rose 0.5% against the Australian dollar, 0.4% versus the kiwi, and 0.2% relative to the yen, euro, Swiss franc, and sterling. Alternatively, the dollar has edged 0.1% lower against the yuan and loonie.

The yields on ten-year U.S. treasuries, German bunds and British gilts firmed a basis point.

WTI oil rose 0.8% overnight, while Comex gold settled back 0.2%.

Only low-tier data have been reported.

GDP in Singapore recorded an on-year rise of 1.2% in the first quarter, down from 1.9% in the final quarter of 2018, 4.7% in the first quarter of last year and in fact the smallest growth in 13 quarters.

On-year GDP growth in Thailand likewise slowed to a 17-quarter low of 2.8% in the first quarter from 3.6% in 4Q18 and 5.0% in 1Q18.

The Greek current account in March recorded its largest deficit in 3 months. The gap was about 30% bigger than a year earlier. Spain’s trade deficit last quarter totaled EUR 9.46 billion, 36% wider than a year earlier.

The Confederation of British industries’ monthly industrial trends index dropped five index points to a reading of minus 10 in May, lowest since October 2016, shortly after the Brexit referendum that year. the index six¬† months ago had printed at +10. Proponents of leaving the EU without a deal in place seem to be strengthening their position.

South Korean PPI inflation accelerated to a 4-month high in April but remained very low at 0.6%.

Consumer confidence in the Netherlands was unchanged in May from April’s two-month low of -3. Consumer sentiment in Denmark improved to an 8-month high of 5.9 in May, but Turkish consumer confidence dropped 8.2 points to a record low of 55.3 this month.

The OECD semi-annual Outlook projects global growth of 3.2% this year, a downward revision, and 3.4% in 2020. Individual country growth forecasts for the current year are 2.8% in the United States, 1.2% in Euroland, 0.7% in Japan, 6.2% in China and 7.2% in India.

Central bank watchers are combing through minutes of the Reserve Bank of Australia’s policy review of May 7 and various comments by Fed, RBA. and Bank of England officials.

  • RBA minutes note persistently subdued inflation in major industrial economies along with their accommodative polices. The minutes are more dovish than those from previous policy reviews, and comments by RBA Governor Lowe hint that the OCR might need to be cut next month.
  • Fed Chairman Powell asserted that rising U.S. business debt doesn’t pose that kind of systemic threat that unsustainable subprime mortgage debt did.
  • Fed Vice-Chair Clarida asserted that the overall health of the U.S. economy allows Fed policy to be data dependent, and Philly Fed President expressed opposition to a strictly rules-based monetary policy.
  • Bank of England MPC member Broadbent is concerned about the weakness of British business investment, and such could get worse under a hard Brexit.

Still ahead: U.S. existing home sales data and euro area consumer confidence will be reported later today. EU Parliamentary elections will be held between May 23rd and 26th.

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

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