Softer Dollar and Stock Futures.. Russian Troops Closing in on Kyiv and Kharkiv Bombed
February 25, 2022
Stocks had bounced late Thursday when President Biden’s unveiled sanctions failed to include a denial of Russia’s ability to use the SWIFT global payments system or actions directed explicitly against Putin. But with the military conflict near Ukraine’s capital and second largest city, U.S. stock futures are currently down 0.4-0.5%.
Ukraine’s stock market remains shut, and its people do not have access to foreign currency. The Russian MOEX equity index plummeted as much as 45% at one point yesterday before trimming the loss to 33%, and today such has recovered by 13% additionally. The British Ftse and German Dax are up more than 2.0%, and Japan’s Nikkei closed up 2.0% today.
Ten-year sovereign debt yields have risen today by 3 basis points in the U.S. and Germany and two basis points in Japan. WTI oil is up 1.0%, and gold has turned upward again and gained 0.6% on Thursday’s closing level.
The DXY weighted dollar index has slipped 0.2%. The dollar is also down 0.2% against the euro, loonie, and yuan and shows even bigger declines of 0.8% relative to the Mexican peso, 1.3% versus the Turkish lira, and 2.8% versus Russian ruble — three currencies that experienced big losses on Thursday.
Being the second to last business day of February, Friday has seen a lot of economic data released around the world.
Economic sentiment in the euro area rose 1.3 index points to a 3-month high of 114.0 in February. That’s still down from 117.6 in July when several sectors such as industry recorded all-time highs.
The estimated contraction of German GDP last quarter has been revised sharply lower to -0.3%, resulting in an 0n-year advance of 1.8% versus 1.4% reported previously. German GDP had plunged 4.6% in 2020 and then rebounded on average by 2.9% last year.
German import prices shot up 4.3% on month in January. This lifted the 12-month rate of increase to a 567-month high of 26.9%, breaking a record that was set during the first world oil crisis in 1974. The cost of imported energy in Germany was 144.4% greater last month than in January 2021 when such posted a 13.1% on-year drop.
British consumer confidence fell seven index points to a 13-month low in February. Analysts were predicting a marginal improvement. British car production in January was 20.1% less than a year earlier.
French household consumption sank 1.5% in January, its biggest monthly decline in half oa year.
Swedish consumer sentiment fell to a 15-month low this month, but Austrian, Finnish, and Greek consumer confidence improved to 3-month highs.
In Italy, consumer confidence and manufacturing sector sentiment fell to 11- and 5-month lows in February.
Swedish producer price inflation of 19.8% in January was only marginally less than the record 20.1% pace in December.
French PPI inflation accelerated 4.2 percentage points to a record 22.2% in January. French CPI inflation of 3.6% this month was 0.7 percentage points above January’s pace and the most in 163 months. In January 2021, by comparison, French CPI inflation was extremely low oat 0.6%.
Icelandic CPI inflation this month of 6.2% was half a percentage point above January’s pace and the most in ten years.
Spanish PPI inflation of 35.7% last month was at a record high and up from just 0.9% in January 2021. Even so, Spanish business confidence climbed to a record high in February.
Belgian CPI inflation in February of 8.0% was the most since the 1940s.
Dutch business confidence fell to a 10-month low this month. Business sentiment in Austria and Greece touched two-month lows in February, and Denmark’s business confidence fell to a 1-year low. But business confidence in Finland rose to a 3-month high.
On-year M3 money growth in the euro area slowed in January to 6.4%, but bank lending to households and non-financial firms remained ample with 12-month increases in excess of 4.0%.
Belgian GDP grew 0.5% on quarter and 5.4% on year in 4Q 2021. After tumbling 5.7% in 2020, GDP recovered 6.1% in 2021 as a whole.
Japan’s indices of leading and coincident economic indicators in December were each revised a little higher, but the trend designation for the latter measure remained “weakening” for a fourth straight month.
Factory output in Singapore sank 10.7% in January, so instead of posting the 10% year-on-year advance that analysts were anticipating, factory output was only 2.0% above the level in January 2021.
Mexican GDP stagnated last quarter, which slashed on-year growth there to 1.1% from 4.5% in 3Q and 20.0% in the second quarter of last year.
The first batch of U.S. data releases today showed stronger activity and demand but also higher inflation than expected. Personal consumption expenditures jumped 2.1% on month in January, almost one and a half times more than forecast, and personal income did not drop as had been anticipated. The core PCE price deflator posted its fourth consecutive 0.5% monthly advance, resulting in a 12-month 5.2% rate of increase in January compared to rises of 4.9% in December and 3.7% in September. The overall PCE price deflator put inflation at 6.1%, the most in 479 months, that is since February 1982. At end-January 1982, the federal funds rate was at 14.5%, compared to a target of 0-0.25% now.
Still to come: U.S. pending home sales and the Reuters/U. Michigan consumer sentiment index.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: consumer and business confidence, Euroland economic sentiment and money growth, U.S. personal income and spending
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