Easter Holiday Over But Data Flow Still Low and Investors Are Risk Averse
April 19, 2022
Ten-year sovereign debt yields rose sharply this Tuesday with gains of nine basis points in Germany and Great Britain, eight bps in the Netherlands, six bps in France, Italy, Spain and Portugal, and four basis points in the United States.
Share prices plunged 5.3% in Russia, 2.7% in Taiwan, 2.3% in Hong Kong, 1.2% in India, 1.1% in Indonesia, 1.7% so far in Italy, 1.0% in France, and 0.8% in Germany. Alternatively, the British Ftse is just 0.4% lower, U.S. stock futures are generally unchanged, and Australia’s equity market rose 0.6% in spite of the hawkish tone of released Reserve Bank of Australia Board minutes.
The weighted DXY dollar index touched a fresh 25-month high overnight of 101.02 but has settled back to show just a 0.1% net overnight advance. The U.S. currency is 1.0% stronger against the Japanese yen and up 0.3% against the Chinese yuan (touching a 1-month high in the process) and 0.2% versus the Mexican peso. The dollar is unchanged against the Canadian dollar and has dipped 0.1% relative to the euro.
The price of WTI oil sank 1.5%. That of gold is 0.3% softer. The price of Bitcoin continues to fluctuate significantly and is 5% stronger than its quote 30 hours ago.
Today marks the 247th anniversary of the Battle of Concord of shot-heard-round-the-world fame. Plunging share prices in Russia reflect the latest effort by western allies to impose still tighter economic sanctions on Russia, but President Putin shows no sign of reconsidering his quest to destroy Ukraine. Although the extended Easter holiday is over, today saw limited activity on the data release front.
Japanese industrial production growth in February was revised sharply higher to +2.0% from +0.1% estimated initially. Compared to a year earlier, output was up just 0.5% following a 0.8% 12-month rate of decline in January and a 0.9% on-year rise in the final quarter of 2021. Industrial capacity fell 0.1% on month and 1.4% versus February 2021, while capacity utilization rebounded 1.5% on month and rose 0.8% on year.
Portuguese producer prices shot up 6.2% on month and 26.3% on year in March. Each of those rises was the most in over thirty years.
In Bulgaria, consumer prices jumped 2.2% in March and recorded the largest 12-month rate of increase in 164 months.
New Zealand’s service sector purchasing managers index rose 2.7 index points in February to 51.6, moving above the 50 level that separates expanding activity from contraction for the first time since last July when the index was at 55.9.
Sri Lanka’s March manufacturing and service sector PMI readings of 57.8 and 51.3 constitute a 2-month high and a 7-month low, respectively.
Norway posted a record high monthly trade surplus of NOK 138.4 billion in March, thanks to a 231% year-on-year increase in mineral fuel exports. The surplus in March 2021 had been NOK 21.1 billion.
In central banking news, St. Louis Fed District President Bullard called U.S. inflation currently way too high and would prefer to see the federal funds rate as much as three percentage points higher by yearend. Published minutes from the Reserve Bank of Australia’s April policy review acknowledged that inflation is rising in prices and wages and that price inflation is still cresting. The labor market is tighter, and all this means that the first hike of that bank’s official cash rate will need to be made sooner than thought earlier. But officials were not ready to act just yet and preferred to see more price and growth data.
Bank Indonesia reviewed its policy stance this week. The 3.5% seven-day repo rate since a cut in February 2021 was kept at that level, and projected growth this year was revised 0.2 percentage points lower. CPI inflation of 2.64% in March was its highest since April 2020 but low by comparison to many other economies and still within the target range of 2-4%. Core consumer price inflation was a tad below 2.40%. Indonesia is an energy producer and exporter, and that is helping to support economic growth and maintain a relatively stable rupiah.
JUST IN: U.S. housing starts in March easily exceeded analyst forecasts and rose slightly to their highest level in 189 months. Building permits recovered 0.4% to a 2-month high.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank Indonesia, Portugal PPI, Reserve Bank of Australia board minutes
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