Share Prices Slip
January 15, 2020
If all goes as planned, the Phase One trade deal between China and the United States will be signed today, but significant tariffs remain.
The quarterly meeting of branch managers at the Bank of Japan downgraded economic conditions in three of the nine main regions but found none to be experiencing contracting growth and remained somewhat upbeat on future prospects. Their conclusions are consistent with current ultra-easy monetary policy settings not being changed in the months ahead.
Share prices fell 0.5% in Japan and similarly in several other Pacific Rim markets. Stock markets in Europe are marginally mixed.
Ten-year sovereign debt yields fell overnight by 9 basis points in the U.K., 4 bps in Germany and 3 bps in the United States. The price of oil is flat, and that of gold rose 0.4% overnight.
Dollar overnight movements were inconsequential. The currency is 0.3% higher against the Australian and New Zealand dollars and shows a 0.1% uptick versus sterling. The dollar has slipped 0.4% relative to the Swiss franc, 0.2% vis-a-vis the euro and 0.1% against the yen.
U.S. producer prices ticked up just 0.1% last month, resulting in a 1.3% year-on-year advance compared to an increase of 2.6% between end-2017 and end-2018.
The New York Fed’s Empire State manufacturing index improved to a 5-month high of 4.80 in January from a reading of 3.5 in December and 2.9 in November.
Saunders, a dovish member of the Bank of England Monetary Policy Committee and who favored a rate cut at recent policy reviews, conceded that the recent election may give growth a bump but stressed that such would be marginal and not change Britain’s weak growth trend. He’s worried that inflation could become too low if the central bank fails to be sufficiently accommodative. After he had spoken, British price data showed a further deceleration of CPI inflation to a 37-month low of 1.3% in December from 1.5% in November and 2.1% at end-2018. Producer output inflation picked up to 0.9%, and producer input inflation (-0.1%) became less negative. House price inflation rose to 2.2% in November.
German real GDP expanded only 0.6% in 2019, its weakest performance since back-to-back 0.4% growth in 2012 and 2013. Growth decelerated from 1.5% in 2018 and 2.5% in 2017 and had also exceeded 2.0% in 2016. German got negative growth contributions last year from both inventories and net foreign demand, and investment spending on machinery and equipment slowed very sharply. The German public sector ran a budget surplus for a sixth straight year, and in 2019 such equaled 1.5% of GDP.
Industrial production in the euro area rose 0.2% in November thanks to a 0.9% increase in German. This was the first monthly increase in Euroland industrial production in three months. Output was 1.5% lower than its year-earlier level, however.
The seasonally adjusted Euroland trade surplus fell back to EUR 19.2 billion in November after October’s spike to EUR 24.0 billion. The unadjusted eleven-month surplus of EUR 203.4 billion was 14% wider than a year earlier.
French CPI inflation accelerated a half percentage point to a 1-year high of 1.5% in December, and Spanish CPI inflation doubled to a 7-month high of 0.8%. Swedish CPI inflation of 1.8% was unchanged from November’s pace.
The stock of Japanese M2 money was 2.7% greater than a year earlier in both November and December and posted average growth of 2.4% in 2019, down from 2.9% in 2018 and 4.0% in 2017. Japanese machine tool orders were 33.7% lower in December than a year before, marking the seventh straight year-on-year decline of more than 30.0%.
South African retail sales grew 2.6% on year in November, the most since April’s 2.7% rise.
Retail sales in Brazil rose 0.6% in November and 2.9% from a year earlier.
India’s $118 billion trade deficit in the first nine months of the current fiscal year (April-December) was 20% smaller than a year earlier.
Norway’s trade surplus last year was 48% smaller than the 2018 surplus.
The impeachment trial of President Trump in the senate will begin next week.
Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British consumer prices, Euroland industrial production, Euroland trade balance, German GDP in 2019, U.S. PPI
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