Big Jump in Fossil Fuel Prices Marks U.S. Holiday

October 11, 2021

Financial market depth today will be diminished by holidays in Canada (Thanksgiving) and the United States (formerly known as Columbus Day but renamed Indigenous Peoples’ Day in many states).

Inflationary concerns around the world are being inflamed by a 3.3% overnight additional leap in the price of WTI oil to around $82/barrel. That price hadn’t closed above $80 in seven years and was hovering around $53 a year ago.

The dollar strengthened overnight by 0.6% against the yen but slid 0.5% versus the Australian dollar and 0.1% relative to the loonie, kiwi, Mexican peso, and Turkish lira. The EUR/USD relationship is unchanged. Swissie is steady, too. Gold is 0.2% softer.

Stock markets rose 2.0% in Hong Kong, 1.6% in Japan and 0.4% so far in the U.K., but losses in other equity markets this Monday amount to  0.7% in New Zealand and Spain, 0.6% in Italy and 0.3% in Australia, Indonesia, Germany, and France. U.S. equity futures especially in the tech sector have been depressed by the rise in energy prices.

Ten-year sovereign debt yields rose five basis points in the U.K., four bps in Italy, three bps in Germany, France and Spain and one basis point in Japan.

Norwegian CPI inflation accelerated 0.7 percentage points to a 62-month high of 4.1% in September, and Norwegian producer prices soared 8.0% on month, lifting PPI inflation to a record high of 57.8% from 50.1% in August and minus 5.7% last December.

Danish CPI inflation of 2.2% last month was the highest in 106 months, and Czech consumer price inflation of 4.9% last month was the most in around 13 years.

Italian industrial production in August was unchanged from July’s level and 0.2% below its year-earlier level. That was only the second year-over-year drop in nine months.

In Belgium, industrial production rose on month in each of the first eight months of 2021, but August’s 0.1% uptick was the smallest increase in that sequence. Compared to August 2020, production climbed 29.9%.

Turkish unemployment of 12.1% in August matched July’s level after a 3-year low of 10.7% in June. Turkey’s current account of $523 million was in surplus in August for the first time since last October.

Ireland’s construction purchasing managers index fell 1.2 index points to a 5-month low of 56.3 in September.

A 71.9% year-on-year rise in Japanese machine tool orders in September was the smallest 12-month increase since March and down from 85.2% in August and 141.9% last May.

Retail sales in Indonesia rose 2.1% in August. That was the first monthly increase since May and trimmed the year-on-year decline to 2.1%.

South Africa‘s Sacci-compiled business confidence index fell to a one-year low in September.

Romanian GDP growth in 2Q 2021 has been revised 0.1 percentage point higher to 1.9% and was associated with year-on-year growth of 13.9% compared to the pandemic-afflicted second quarter of 2020.

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

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