Bitcoin Plunged, Dollar and Price of Oil Rose, and Equities Mixed

December 6, 2021

From $56,830 on Friday to $46,648 on Saturday, the price of a Bitcoin dived more than 15%. At $48,251 now, the price remains about 30% below its record peak.

The dollar is benefiting from a belief that Fed policy over the  coming six months will pay more attention to containing the spike in inflation than to countering the Omicron  Variant. Based on rhetoric and forward guidance, the Fed is prioritizing inflation to a greater degree than are officials at the Bank of Japan and European Central Bank. The dollar has firmed 0.1% further on a weighted basis and shows overnight gains of 0.4% against the yen, 0.3% versus the loonie, and 0.2% vis-a-vis the euro but dips of 0.1% against sterling and the kiwi. The Turkish  lira is down  0.3%.

News of a Saudi price increase has lifted West Texas Intermediate crude oil by 2.5%. The price of gold, in contrast, is 0.2% lower.

Share prices in Asia closed down  1.8% in Hong Kong, 0.5% in China and 0.8% in China, and those in India have thus far lost over 1.5%. But stock markets are up over 1.0% in the U.K., Germany, France and Italy. In U.S. trading the DOW and S&P 500 are up 1.7% and 0.5%, while the tech-intensive Nasdaq, which tends to be particularly sensitive to rising interest costs, has lost 0.5%. The ten-year Treasury yield has rebounded five basis points to 1.39%.

Today’s data shocker comes from Germany, where industrial orders, which had been projected to dip  only marginally, instead crashed 6.9% in October, posting their first year-on-year drop (-1.0%) in 13 months and a gain of only 1.7% on balance compared to the level immediately before the pandemic’s onset. Weakness was most concentrated in a double-digit drop of export demand for German capital goods.

Euroland’s construction purchasing managers index improved 2.1 points to a 45-month  high in November. However, national results within the euro area diverged greatly. Italy’s construction index soared 6.9 points, breaking above August’s record setting 65.2 level to a fresh all-time high of 65.5. Although at a 15-month high, Germany’s construction sector survey remained below 50 (47.9 to be precise), signalling another contraction, and the German sub-indices for demand and future expectations dropped to 3- and 6-month lows. Covid fears, supply bottlenecks, and elevated costs continue to depress the sector.

The British construction PMI printed in November at a 4-month high of 55.5.

But three other purchasing manager survey reports were weak. Lebanon’s private sector PMI fell to a nine-month low of 46.1 and exhibited the weakest demand since last year. Egypt’s non-oil PMI merely matched October’s five-month low of 48.7, and Saudi Arabian non-oil PMI declined 0.8 points to a 3-month low of 56.9.

October retail sales in Italy underperformed expectations, edging up only 0.1% on month and slowing from a year-on-year growth perspective to 3.7% from 5.4% in September, 7.9% last June and 30.4% in April.

Czech retail sales rose 1.4% on month and  5.6% on year in October. Both comparisons were stronger than those from September.

Greek real GDP posted a fifth straight quarterly increase, climbing 2.7% in 3Q 2021. year-on-year Greek growth swung from -15.7% in the second quarter of 2020 to +13.4% in 3Q 2021.

Consumer confidence in Mexico rose to a 32-month high in November, but the sentiment level remained well below the 50 level at 45.8.

The Sentix gauge of sentiment toward the euro area economy faltered further in December to an 8-month low of 13.5 from 18.3 in November and 29.8 last July.

Austrian wholesale price inflation rose additionally in November to a record high of 16.6%.

As a growth-boosting  move in the face of slower activity, the People’s Bank of China’s reserve ratio is being lowered by half a percentage point, effective in the  middle of this month.

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

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