Japanese GDP Reported and Many Holiday Closures

February 15, 2021

It’s President’s Day in the United States, Carnival in Brazil, Family Day in Canada, and the continuing Lunar New Year holiday break in China and several other Asian markets.

The dollar is narrowly mixed and down 0.1% on a trade-weighted basis.

Ice-cold temperatures in much of the United States have lifted West Texas Intermediate crude oil by 1.4%.

Senators voted 57-43 for Trump’s impeachment, falling short of the two-thirds majority required for conviction and leaving him eligible to run for president again in 2024. The U.S. policy/political front now shifts to the pandemic relief package, which Democrats hope to secure within a month. In conjunction with the roll-out of vaccines and expected higher inflation, the prospect of policy stimulus is lifting long-term interest rates in the United States and other economies, too. Ten-year sovereign debt yields rose today by 6 basis points in the U.K., 4 bps in Germany, France and Italy and one basis point in Japan.

Another financial market highlight today was the first close of Japan’s Nikkei-225 index above 30,000 since 1990. Japan’s stock market benchmark record high close on December 29, 1989 was 38,916, but it fell swiftly in the ensuing year and got as low as 7, 173 on March 6, 2009. For today, the Nikkei rose 1.9%. In other notable open stock markets today, equities went up 1.8% in the U.K., 1.4% in France and Italy but just 0.6% in Germany.

Japanese GDP growth slowed last quarter to a more robust-than-expected 3.0% (12.7% at a seasonally adjust annual rate) from 5.3% (22.7% SAAR) in the third quarter. Real GDP sank 4.8% in 2020, and the fourth-quarter level was 1.2% lower than a year earlier. The GDP price deflator dropped 0.5% on quarter and 1.4% on year but posted an average increase of 0.9% in 2020 as a whole.

Japanese industrial production in December was revised to show declines of 1.0% from November and 2.6% from December 2019. Calendar year industrial production dropped 10.1% in 2020 after a 3.0% slide in 2019. Capacity utilization slumped 12.4% last year on top of a 3.1% decline in 2019.

Industrial production in the euro area fell more sharply than expected in December, losing 1.6% compared to November and 0.8% from a year earlier. Production dropped 8.7% on average last year.

Euroland’s trade balance widened from EUR 221 billion in 2019 to EUR 234.5 billion last year, with exports and imports dropping 9.2% and 10.8%, respectively. December’s seasonally adjusted EUR 27.3 billion surplus was more than 40% wider than projected and the largest monthly surplus of 2020.

Indian wholesale price inflation accelerated by 0.8 percentage points to 2.0% in January.

Singapore GDP recorded a 2.4% drop between the fourth quarters of 2019 and 2020.

Thai GDP dropped 4.2% on year last quarter and by 6.1% on average in 2020.

Danish GDP, which had rebounded 5.2% last summer, rose just 0.6% in the final quarter of 2020.

Greek CPI inflation remained negative in January for a tenth straight month. Consumer prices fell 1.3% versus December and by 2.0% compared to a year earlier.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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