Marking Time

September 17, 2019

Ahead of the FOMC’s interest rate decision on Wednesday, the dollar moved overnight by no more than +/-0.1% against the euro, yen, Swiss franc, loonie and sterling. The dollar separately rose 0.5% versus the Australian dollar after a signal that Aussie monetary policy might be eased further, and gains were made of 0.4% relative to the yuan and 0.3% against the peso and kiwi.

Share prices dropped 1.7% in China and India, 1.2% in Hong Kong and 0.7% in Singapore, but equities closed little changed in Japan and South Korea. Markets in Spain, Italy and Germany are down 0.6%, 0.4%, and 0.3% so far.

The 10-year U.S. Treasury yield declined a further 3 basis points in futures.

Following a 10+% spike on Monday in WTI oil, such fell back 1.8% overnight. The attack on Saudi Arabia’s oil field and refinery is expected to knock out a lot of production for quite a while.

Comex gold fell 0.3% overnight.

Minutes from the Reserve Bank of Australia’s September policy meeting were published. While the Board agreed to leave the official cash rate unchanged at a record low of 1.0%, it sees an extended period ahead of low interest rates and “would ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time.”

The Swiss government’s quarterly forecast lowered projected growth this year from 1.2% to 0.8% and retained a forecast growth rate in 2020 of 1.7%. Global headwinds were cited.

The ZEW expectations index, a measure of investor sentiment toward Germany, improved more than analysts were expected this month after having tanked in August. Such printed at -22.5 (still far beneath the long-term +21.5 average reading of this data series) after -44.1 in August and was the best score in 3 months. The perception of current German economic conditions, however, deteriorated 6.1 index points to a 112-month low. ZEW Institute readings for the whole euro area of -22.4 and -15.6 mimicked the patterns traced in Germany.

Consumer confidence in New Zealand according to the Westpac quarterly measure fell to a 7-year low in the second quarter. The latest reading of 103.1 was down from 103.5 in 1Q and 113.4  two years earlier.

Chinese house price inflation of 8.8% in the year to August was at a 10-month low.

Australian house prices last quarter fell 0.7% from the first-quarter level and maintained the 7.4% on-year drop seen a quarter earlier.

Swedish unemployment of 7.1% last month was a percentage point higher than in August 2018.

Hong Kong unemployment had ticked up 0.1 percentage point in July to its highest level since March 2018 and remained steady at 2.9% in August.

U.S. industrial production, capacity utilization, Treasury-compiled U.S. capital flows, and the NAHB housing index will be reported later today. Canada releases the monthly survey of Manufacturing sales, orders, and inventories.

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

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