Little Opening and Not Much Happening this Xmas Eve

December 24, 2019

Financial markets are either closed all day or part of the day in Spain, Italy, Germany, Switzerland, Australia, New Zealand, Norway, Portugal, the Netherlands, Indonesia, Singapore, the U.K., France, Singapore, and Hong Kong. U.S. markets will shut down about an hour after noon EST.

Overnight movements in the dollar have by and large been confined to plus or minus 0.1%.

Japan and China were open, and share prices there respectively closed unchanged and up 0.7%. Equities fell 0.6% in South Korea and by 0.4% in India and Taiwan. In those European stock markets that traded some part of today, there was minimal activity. In the U.S., the S&P is flat, and the Dow has edged 0.1% lower.

The 10-year Treasury yield and British gilt yields have dipped a basis point to 1.92% and 0.76%. Their Japanese counterpart remains at minus 0.01%.

Comex gold is trading just above $1,500 per troy ounce, a gain of 0.8%, and WTI oil is 0.6% firmer.

Japanese monetary policy is spinning its wheels. Minutes from the BOJ Policy Board meeting of October 30-31 reveals a split between those feeling that now is not the time to lessen monetary stimulus given the fragility of Japan’s economy and others concerned that prolonged zero to negative interest rates may irrevocably damage life insurers and other financial institutions. Misgivings about ultra-easy monetary policy have been expressed for more than a year. Meanwhile, the Bank of Japan published its latest estimates of of underlying inflation. A 0.2% year-on-year rise in the core trimmed mean CPI was the lowest in 31 months and down from a 2019 high of 0.7% recorded in April and May. The Bank established a medium term goal of 2.0% core consumer price inflation way back in April of 2013.

Frustrated members of the Bank of Japan Board were hoping back in October for a restructured mix between monetary policy and fiscal policy. The government in fact approved a fiscal stimulus package earlier this month. In October, a delayed hike of the sales tax in Japan to 10% from 8% took effect, and its impact was still being felt recently when a 4.1% on-year drop in supermarket sales in October was followed by a 1.4% drop in November.

The Dutch current account surplus last quarter was EUR 19.29 billion compared to EUR 20.06 billion in the third quarter of 2018. That lifted the year-to-date surplus to EUR 49.5 billion. Dutch real GDP rose 0.4% last quarter, unrevised from the preliminary government estimate and matching the growth rates in the first two quarters of this year. GDP was 1.9% higher than a year earlier.

Mexican unemployment last month was 3.5% seasonally adjusted, down from 3.6% in October and 3.8% in September but above the November 2018 level of 3.3%. The economic activity index fell 0.6% between October 2018 and October 2019.

The Richmond Fed manufacturing index sank four points to -5 in December, which outside of a -9 reading in September was the lowest of 2019.

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


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