Swing Continues Away from Safe Haven Assets
September 13, 2019
Ten-year sovereign debt yields increased this Friday by six basis points in Japan, 5 bps in the U.K., and 3 basis points in the U.S. and Germany.
The dollar fell overnight by 1.0% against sterling, 0.5% relative to the Swiss franc, 0.3% vis-a-vis the euro, 0.2% versus the peso and 0.1% against the yen and Australian dollar.
The prices of gold and oil firmed 0.3% and 0.2%.
Stock markets in the Pacific Rim closed up 1.1% in Japan, 1.0% in Hong Kong, 0.8% in China and India, and 0.5% in Singapore, Taiwan and New Zealand. South Korea’s exchange remained closed for holiday. Share prices in Europe show gains so far of 0.6% in Spain, 0.5% in Italy and Germany and 0.4% in France but losses of 0.5% in Switzerland and 0.1% in the U.K..
The monthly rise in Japanese industrial production during July was left unrevised at 1.3% and associated with an on-year increase of 0.7%. Capacity usage in the month went up 1.1% on month and 2.5% on year.
New Zealand’s manufacturing purchasing managers index recorded a second straight sub-50 reading, this time of 48.4 after June’s 48.1 score. All earlier readings in 2019 had been above 50 with a high of 53.7 last February.
German wholesale prices dropped 0.8% on month in August and 1.1% on year. That’s the second straight 12-month decline and compares with a year-on-year rise of 2.5% last January.
Spanish CPI inflation in August was confirmed at the preliminary estimate of 0.3%, a 35-month low and down from 1.5% in April.
In contrast, Polish CPI inflation last month matched July’s 81-month high of 2.9%, and Finnish CPI inflation climbed 0.3 percentage points to a 3-month high of 1.1% in August.
Swedish real GDP grew only 0.1% on quarter for the second time in a row during 2Q19, which trimmed the year-on-year growth rate to 1.0% from 1.5% in 1Q and 2.8% in the second quarter of 2018. Net exports and business investment exerted drags on the growth rate.
On-year Irish GDP growth of 5.8% last quarter was down from 7.4% in the first quarter and 10.4% in the second quarter of 2018.
Labor cost inflation in the euro area accelerated to 2.7% in the second quarter from 2.5% in the first quarter and 2.2% in the second quarter of 2018.
Euroland’s seasonally adjusted trade surplus widened EUR 1.3 billion to a 2-month high of EUR 19.0 billion in July. The unadjusted surplus over the first seven months of 2019, EUR 126.1 billion, was 4.6% bigger than a year earlier.
Current account data were released in Turkey, the Czech Republic and Ireland. Turkey had a $1.158 billion surplus in July compared to a $2.18 billion deficit in July 2018. The Czech surplus in the second quarter of EUR 33.56 billion equaled 1.8% of GDP. Ireland’s EUR 26.54 billion deficit last quarter represents a EUR 37 billion adverse swing from a deficit of EUR 10.56 billion in the second quarter of 2018.
Dutch retail sales were 3.4% greater in July than a year earlier, the largest year-on-year increase since 4.1% in March.
Late yesterday came the announcement from the Central Reserve Bank of Peru that its reference interest rate, which had been cut in August by 25 basis points, was left unchanged after this month’s review at 2.5%. Previously, six other 25-basis point reductions were engineered from May 2017 to March 2018. A released statement from the central bank’s Board of Directors mentions continuing global risks to global growth and primary commodity prices, and it projects that Peruvian inflation will be converging toward 2.0%.
U.S. data releases today feature retail sales and include import prices and the preliminary U. Michigan/Reuters consumer sentiment index for September.
EU leaders and finance ministers continue to meet today in Helsinki.
Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Reserve Bank of Peru, Euroland labor costs and trade surplus, Swedish GDP, Turkey's current account