With an Eye Toward Wednesday’s FOMC Meeting, Markets in Pause Mode

June 14, 2021

The dollar is 0.1% softer on a weighted basis, and most key dollar currency pairs have barely moved from Friday closing levels. Not only are investors marking time until Wednesday’s FOMC announcement, but several markets were closed today (China, Taiwan, and Hong Kong for the Dragon Boat Festival and Australia for the Queen’s Birthday holiday).

A 0.7% advance in the Japanese Nikkei-225 stock market index has been the most notable stock market move. Equities rose 0.1% in South Korea, fell 0.3% in Indonesia, and show gains of 0.2% in the U.K. and of 0.1% in Germany and France. U.S. stock futures are narrowly mixed.

10-year U.S., German, and British sovereign debt yields are flat. The prices of WTI oil and Comex gold are up 0.5% and down 1.3%, respectively.

A 0.8% advance of industrial production in the euro area in April was twice what analysts were expecting and resulted in a record 39.3% on-year increase, including 12-month increases of 79.5% in Italy, 50.5% in Spain, 45.0% in France, and 33.0% in in Germany.

Japan‘s advance of industrial production during April was revised upward by 0.4 percentage points to 2.9% from March and 15.8% from the same month a year earlier. Bare in mind that April 2020 was ground zero in terms of Covid restrictions against social gathering. Industrial capacity was 0.9% less than a year earlier, while capacity utilization recorded a 23.8% on-year increase.

Other comparisons reported today of industrial production between April 2020 and April 2021 included advances of 58.8% in Hungary, 63.2% in Romania, and 44.3% in Poland.

The Swiss combined producer price and import price index climbed 0.8% in May, lifting its on-year inflation pace to a 33-month high of 3.2% from 1.8% in April, -0.2% in February and -2.1% at the end of 2020. Import prices were 6.4% greater in May than a year earlier, while domestic producer prices went up 1.6%.

Indian wholesale price inflation accelerated to a 269-month high of 12.94% in May (most since the Asian debt crisis). The fuel component of the index jumped to a 37.6% on-year advance, but manufactured goods (+10.8%) also showed a double-digit increase.

Finnish consumer prices exhibited lessening upward momentum in May with a 0.2% monthly rise, and the 12-month rate increased just 0.1 percentage point to 2.2%, which nonetheless was the highest pace in 101 months.

Portuguese CPI inflation in May was confirmed at its preliminary estimate of 1.2%.

Turkey’s current account deficit in April of $1.712 billion was just a third as much as in the same month a year earlier, and the January-April deficit of $9.6 billion was down from $14.2 billion in April 2020.

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

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