Meaningful Data Released Today in China, U.S., U.K., Japan and Euroland

September 15, 2021

The dollar fell overnight by 0.2% against the DXY weighted index and sterling, 0.4% versus the Japanese yen, and 0.1% relative to the euro and Swiss franc.

Ten-year sovereign debt yields rose two basis points each in the United States, Germany and Great Britain but slipped a basis point in Japan.

Equity markets mostly dropped in the Pacific Rim and Europe, including losses of 1.8% in Hong Kong, 0.7% in Singapore, 0.5% in Taiwan and Japan, and 0.3% in Indonesia and Australia. Key indices in Europe so far are down at least 0.7% in Germany, Italy, Switzerland and Spain. But in the U.S., both the S&P and DOW are up modestly.

The price of WTI oil made a big upward move, rising 3.3%, and that of gold is down 0.5%.

Investors today have a smorgasbord of data to digest.

Chinese releases persuaded government analysts to concede that the recovery pace slowed last month, depressed by chip shortages and the effects of climate change. Unemployment remained at July’s 3-month high of 5.1%. Industrial production and retail sales registered their smallest on-year advances in 13 and 12 months. The January-August year-to-date rise in fixed asset investment (8.9%) was the smallest so far of 2021 and down from 35% in January-February. A 0.2% monthly increase in property prices was the least in nine months and depressed the 12-month rate of increase to a 7-month low of 4.2%.

U.S. import prices fell 0.3% on month in August, their firstĀ  monthly drop since October and largest decline in 16 months. Fuel prices sank 2.3%, much more than assumed, and non-fuel imports cost 0.1% less thanĀ  in July. A 0.4% monthly rise in export prices was just a third as much as in July. U.S. industrial production last month went up 0.4%, half as much as in July and the smallest rise since 0.1% in April. Capacity utilization of 76.4% in August was 0.2 percentage points above the usage rate a year earlier. The Empire State manufacturing index in September rebounded to a reading of 34.3 after slumping from 43.0 in July to 18.3 in August. A 0.3% rise in U.S. mortgage applications last week followed back-to-back declines of 2.4% and 1.9%.

British CPI inflation accelerated 1.2 percentage points to a 113-month high of 3.2% in August. Core CPI of 3.1% was up from 1.8% in July. Producer output price inflation of 5.9% was at a 114-month high, and producer input prices were 11% above their year-earlier level. The U.K. index of leading economic indicators rose only 0.1% in July, down from June’s 0.4% advance.

Japan’s tertiary index of service-sector activity sank 0.6% in July following a 0.5% decline in the second quarter. A 2.2% monthly increase in June had followed a 3.0% slide in May. In year-on-year comparisons, annual growth in the tertiary index imploded from 10.1% in May to 2.0% in July. Japanese core domestic machinery orders revived 0.9% in July and were 11.1% above their July 2020 level.

Industrial production in the euro area advanced 1.5% in July, led by a 2.7% increase in capital goods output. But industrial production continued to show smaller year-on-year advances, falling to 7.7% from 10.1% in June and 39.7% in April. Euroland labor costs last quarter were 0.1% lower than in 2Q 2020 compared to a 4.5% jump between 2Q 2019 and 2Q 2020. Within the euro area, CPI inflation rose 0.7 percentage points to a 33-month high of 1.9% in France and 0.1 percentage point to a 113-month high of 2.0% in Italy.

Polish CPI inflation of 5.5% in August was a half percentage point above July’s level and the most since mid-2001.

CPI inflation in Canada accelerated 0.4 percentage points in August to a 221-month high of 4.1%, but a monthly 0.2% advance in consumer prices was the smallest in eight months.

In non-economic U.S. news, California Governor Newsom secured a resounding victory in that state’s recall election, as two of every three voters rejected the proposal calling for his ouster. Over 150,000 new Covid cases were identified yesterday, and nearly 1,900 deaths from the pandemic were reported.

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

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