Equities Rally Further… Dollar Narrowly Mixed

June 11, 2019

Equities advanced in the Pacific Rim by 2.6% in China, 1.6% in Australia, 0.9% in Hong Kong and 0.3% in Japan.

In European trading thus far, stocks have risen 1.3% in Germany, 1.0% in Switzerland, 0.9% in Italy, 0.8% in France and 0.5% in the U.K..

European data reflect continuing concern about trade tensions. The Sentix measure of investor sentiment toward the euro area dropped more than 8 points to negative 3.3 in June. And the Bank of France’s monthly business sentiment index stagnated. Britain reported slower jobs growth, a larger rise in jobless insurance claims, and wage growth only marginally above 3.0%.

Ten-year sovereign debt yields rose two basis points in the U.S. and U.K. and by a basis point in Japan.

WTI oil firmed 0.7%. Comex gold is 0.2% softer.

The dollar slid 0.3% against the yuan, 0.2% versus the peso and sterling, and 0.1% relative to the loonie but rose 0.3% against the Swiss franc and yen, by 0.1% versus the Aussie dollar and 0.4% versus the kiwi.

Japanese machine tool orders recorded their third straight on-year monthly decline of more than 25%. Japanese M2 money growth accelerated 0.2 percentage points to 2.5% in May. That’s still below last year’s 2.9% average gain.

The National Bank of Australia’s monthly business confidence index leaped 7 points to +7 in May even as business conditions fell 2 points to +1.

Consumer price inflation slowed 0.4 percentage points to 2.5% in Norway and by 0.3 percentage points in Denmark to 0.7% in May. Czech CPI inflation, by contrast, rose to 2.9% from 2.8%.

The Central Bank of Chile last Friday unexpectedly cut its benchmark interest rate by 50 basis points to 2.50%, the lowest level sinceĀ  a 25-basis point hike in January. The policy reversal returns the key interest rate to the low prevailing from May 2017 until October 2018. According to a officials, one should not infer this tightening is the first of several moves:

The Board estimates that, in light of the updating of the structural parameters, the
economy has not recovered enough to close the activity gap and boost inflation.
Accordingly, the Board has deemed necessary to recalibrate the monetary impulse.
The Board estimates that, if the baseline scenario materializes, this change in the MPR
will suffice to ensure the convergence of inflation to the target in the policy horizon.
Going forward, the onset of the MPR normalization process will depend on inflation

U.S. small business sentiment according to the monthly NIFB index increased 1.5 points to a reading of 105.0 in May, which constitutes a 7-month high and marks the fifth improvement in a row.

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



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