Brexit Headed for Photo Finnish and a Lot of Chinese Data Released
October 18, 2019
A debate and vote on British Prime Minister Johnson’s deal with the EU is scheduled Saturday. He needs 318 yes votes for approval, and the outcome figures to be very close to that threshold. Johnson needs only a simple majority win. In a more perfectly designed political system of self-governance, a decision with such profound and irreversible implications as Brexit ought to require a greater threshold of initial support to forestall toxic social strains that will linger long afterward.
Investors now attach greater likelihood to the U.K. leaving the EU on October 31st than they were assuming a few days ago, which has sterling just 1 cent below Thursday’s 5-month high of $1.2988. Uncertainty over the Brexit issue depressed Britain’s index of leading economic indicators by 0.5% in August after a drop of 0.2% in July.
China reported that real GDP last quarter rose 1.5% versus the second-quarter level, trimming on-year growth to a 27-1/2 year low of 6.0%. Analysts were anticipating 6.1%. The quarterly data look suspiciously smooth, ranging between 1.4% and 1.6% since mid-2018.
On-year growth in Chinese industrial production (a 3-month high of 5.8%) and retail sales (a 3-month high of 7.8%) quickened in September as forecast. Unemployment of 5.2% matched August’s 2-month low, while year-to-date growth in fixed asset investment weakened to 5.4% from 5.5% in August and 5.9% in full-2018.
The dollar is trading marginally below Thursday closing levels against the euro, loonie, peso, kiwi and Aussie dollar. It has recorded a 0.1% uptick relative to the yuan and shows no net change relative to the Swiss franc or yen.
In Pacific Rim stock market action, Japan’s Nikkei closed up 0.2%, but share prices dropped 1.3% in China, 0.8% in South Korea and New Zealand, 0.5% in Hong Kong and Australia and 0.4% in Singapore. European markets are mostly a touch weaker. The European Council continued to meet today in Brussels.
Ten-year sovereign debt yields rose four basis points in the U.K., 2 bps in Germany, and a basis point each in Japan and the United States.
WTI oil rose 0.8% in price, while gold eased back 0.4%.
Total Japanese CPI inflation declined to a 7-month low of 0.2% in September. The energy component dropped 0.9% on month and 1.9% on year. Core consumer prices, which excludes perishable foods, recorded a 29-month year-on-year low of 0.3%.
The euro area current account surplus on a seasonally adjusted basis widened to EUR 26.6 billion in August due to a 1.9% drop in debit items. The unadjusted surplus over the last 12 reported months was EUR 306.1 billion, equivalent to 2.6% of GDP. That’s down from EUR 397.1 billion in the year through August 2018 (3.5% of GDP).
A see-saw pattern of on-year industrial production growth in Poland continued last month when such went up 5.6%. There previously had been 12-month recorded declines of 1.3% in August and 2.7% in June, mixed in with on-year advances of 7.7% in May and 5.8% in July. Polish PPI inflation accelerated 0.2 percentage points to a 4-month high of 0.9% last month.
The Conference Board will release the U.S. indices of leading and coincident economic indicators later this morning.
Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: and industrial output, Brexit vote, Chinese GDP, Euroland current account, Japanese CPI, retail sales