More Fuel for These Stressful Times
April 8, 2020
Finance ministers in the euro area for a second time failed to secure a deal that would coordinate their response against the coronavirus pandemic. They will try again later.
The Bank of France revised its forecast of French real GDP growth in the first quarter of 2020 from +0.1% to negative 6%, which would make such the worst quarter since World War II.
British Prime Minister Johnson remains in intensive care with the disease.
There are now 1,444,822 confirmed cases worldwide of the Covid-19 disease, and 83,109 people have so far died. The four leading nations in the death count are Italy, Spain, the U.S., and then France. New York City alone has more reported cases than Italy.
U.S. President Trump is wearing his stress-transmitter hat. He has threatened to cut U.S. funding for the World Health Organization, circumvented the Pentagon inspector general from a role in overseeing the $2 trillion fiscal stimulus, and continues to blame state leaders for logistical glitches in combating the virus. He is also itching to err on the side of ending stay at home sooner rather than later.
Standard and Poor’s downgraded Australia’s top credit rating guidance to negative from stable.
Data reported today attest to the breadth of havoc caused by the world coronavirus pandemic.
European stock markets have traded lower this Wednesday, with drops so far of 1.4% in France and Switzerland, 1.1% in Spain, 1.3% in the U.K., 0.5% in Italy and 0.8% in Germany. Asian markets closed mixed with declines of 3.2% in Indonesia, 1.3% in Singapore, 1.2% in Hong Kong, 0.9% in South Korea, 0.2% in China and 0.6% in India, but increases of 1.4% in Taiwan, and 2.1% in Japan. New Zealand’s market rose 2.7%, but Australia’s fell 0.9%.
The ten-year U.S. Treasury yield is three basis points higher, while the comparable British yield slipped two basis points overnight. German and Japanese 10-year sovereign debt yields are unchanged.
West Texas Intermediate crude oil rose 3.5%, while the price of gold slid 0.3%.
The dollar and sterling firmed firmed marginally. Dollar gains amount to 0.3% versus the euro and yuan, 0.2% against the Swiss franc, and 0.1% relative to the yen, loonie, and kiwi. The dollar is flat against the Australian dollar and down 0.2% relative to the British pound. The dollar fell 0.4% against the Mexican peso but touched a 19-month high versus the Turkish lira.
Japanese core private domestic orders for machinery rose 2.3% on month but fell 2.4% on year in February. Orders from Japan’s public sector plunged 39.1% on month, while export orders went up 2.7%. Japanese bankruptcies in March exceeded their year-earlier level by 11.8%.
The Japanese economy watchers index dropped to a record and 22-year low of 14.2 in March from 27.4 in February and 41.9 in January. Japan’s current account surplus of JPY 3.168 billion in February was 21% wider than a year earlier, as merchandise imports plunged 14.6%. Seasonally adjusted imports were 8.7% less than in January, and the seasonally adjusted current account widened 46% on month.
South African business sentiment fell to a 7-month low in March.
Norwegian CPI inflation of 0.7% in March was at a 90-month low. Producer prices that month were down 7.5% compared to February and 12.6% relative to a year earlier.
Hungarian CPI inflation dropped a half-percentage point to a 4-month low of 3.9% in March.
The number of Australian mortgage loans fell 2.0% in February and were 1.7% lower in value.
Mexican industrial production fell 0.6% on month and 1.9% on year in February.
Indonesian retail sales fell 0.5% on month and 0.8% on year during February.
Even well before Covid-19 became an economic factor, house prices in the euro area rose 0.7% in the last quarter of 2019, down from quarterly increases of 1.4% in 3Q and 1.7% in 2Q.
Canadian building permits dropped 7.3% last month, and there were 7.3% fewer housing starts last month in that economy during March than in February. Analysts were actually looking for an even larger slide in starts.
Poland’s central bank reference rate has been halved to 0.50% and henceforth will be surrounded by a zero percent deposit rate and a 1.0% Lombard rate. There had been an initial monetary policy response to Covid-19 on March 17, including a 50-basis point interest rate cut, liquidity injections via repo operations, and a program of government bond purchases to hold down longer term interest rates. Today’s statement from the National Bank of Poland’s Monetary Policy Council warns that ” the scale of activity drop could be very
sizable. This will be accompanied by a deteriorating situation in the labor market and a
fall of disposable income of households. Further ahead, economic activity should,
however, gradually recover, supported by fiscal measures introduced in Poland and many
other countries as well as strong macroeconomic fundamentals of the Polish economy
related to its low internal and external indebtedness and high competitiveness together
with geographical and sectoral diversification of Polish exports.” Moreover, “despite recent monetary policy easing introduced by NBP, the risk of inflation falling below the NBP inflation target in the monetary policy transmission horizon prevails.”
Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Japanese current account and machinery orders, National Bank of Poland, Trump
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