Inflation Taking No Days Off for the Holiday

November 11, 2021

Today marks the 103rd anniversary of the “war to end all wars,” which is known by a variety of different names — for instance, Armistice Day in France and Germany, Remembrance Day in Canada and Veterans Day here in the United States. U.S. stock markets will be open, but no U.S. data releases are planed. Yesterday’s CPI shocker remains the major investor focus, and unlike the 1970s when elevated U.S. inflation became a significant negative for the dollar, the U.S. currency so far in the present instance has been well bid in the face of evolving U.S. price reports. The weighted DXY dollar index traded 0.2% higher overnight and touched a 16-month high of 95.10.

Against specific currencies, the dollar rose overnight by 0.6% against the loonie, 0.5% versus the kiwi, 0.4% relative to the Australian dollar, 0.3% vis-a-vis the Swissie, but just 0.1% against the euro, yen, yuan and sterling. The highly inflation-sensitive Turkish lira fell 0.9%, and gold, which does well at time of global inflationary waves, strengthened 1.0% overnight. WTI oil settled back 0.4%. Ten-year sovereign debt yields have been generally steady. Stock markets rose 1.2% in China, 1.0% in Hong Kong, and 0.6% in Japan. U.S. futures and European bourses are up marginally.

Japan’s corporate goods price index, essentially a PPI, jumped 1.2% on month in October, its largest leap in 128 months, and 8.0% on year, the most since the first month of 1981. Import prices shot up 4.1% on month and 38.0% on year.

Irish consumer prices climbed 0.7% in October, lifting the 12-month rate of increase to a 174-month high of 5.1% from 3.7% in September and zero percent in March.

Portuguese consumer prices advanced 0.5% on month and 1.8% on year, which is the most in 54 months.

Several British economic indicators were reported this Thursday:

  • Industrial production unexpectedly fell 0.4% in September, depressing the 12-month rate of increase for a fifth straight time to 2.9% from 4.0% in August and 30.0% last April. Factory output slid 0.1% on month to 2.5% below its pre-pandemic level.
  • Construction output in the third quarter sank 8.2% on quarter but was 10.7% higher than a year earlier.
  • Real GDP measured from the supply side rose 0.6% on month in September. Real GDP in the third quarter advanced 1.3% on quarter and 6.6% on year.
  • Business investment last quarter proved disappointing with a 0.4% increase, just a sixth as much as analysts were assuming.
  • Britain’s merchandise trade deficit of GBP 14.927 billion was just marginally smaller than August’s shortfall and resulted in the largest goods and services deficit (GBP 2.777 billion) in 8 months.

Australian labor market statistics for October were much worse than forecast. The jobless rate jumped 0.6 percentage points to a 6-month high. Employment tumbled 46.3 thousand after dropping by over 100k in each of the previous two months, and labor participation of 64.7% was less than forecast.

South African industrial production rose 3.8% on month but just 1.3% on year in September.

New GDP projections for Euroland compiled quarterly by the EU Commission anticipate somewhat upwardly revised growth of 5.0% this year followed by 4.3% in 2022 and 2.4% in 2023. CPI inflation is expected to be 3.7% in 2021, then 2.2% in 2022 and 1.4% in 2023.

There are scheduled monetary policy reviews today in Mexico and Peru.

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

 

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