Investors Looking Ahead to Important Price Data

August 9, 2022

In market action overnight,

  • The dollar marked time, sliding 0.3% against the euro, 0.2% on a weighted DXY basis, and 0.1% relative to the Swiss franc and peso. The dollar also edged up 0.2% against the Australian dollar and 0.1% versus the yen and Canadian dollar.
  • U.S. stock futures fell around 0.3%. Major European bourses are also trading somewhat weaker.
  • Bitcoin’s price tumbled back 2.6%, while WTI oil and the price of gold rose by 1.2% and 0.2%.
  • Japan’s Nikkei closed down 0.9%, while the Shanghai Composite advanced by a modest 0.3%.
  • Ten-year sovereign bond yields climbed nine basis points in Greece, six bps in France and Italy, five bps in Germany and three basis points in the U.K. and U.S. futures trading.
  • Markets in India, Pakistan and Singapore were closed for holiday.

Inflation data are commanding primary market attention.

  • Renaming the landmark Senate bill dealing with climate, prescription costs, and taxes the Inflation Reduction Act underscores the economic significance and political sensitivity of the inflation figures and was pivotal to resurrecting that legislation.
  • The United States, Germany, Italy, Norway, Germany, Japan, Denmark, Portugal, Norway, and Czech Republic will be reporting price figures tomorrow. Not for the first time this year, analysts are predicting a dip in U.S. total and core CPI inflation. Let’s hope they are right this time.
  • In today’s inflation menu, investors learned that consumer prices had dropped 0.7% on month in Brazil, lowering their 12-month increase by 1.8 percentage points to a 7-month low of 10.1% in July. CPI inflation had crested in Brazil at 12.1% in May and was 9.0% in July 2021. On a more sobering note, a 2.3% monthly upsurge in Hungarian consumer prices last month lifted that economy’s inflation rate to a 24-year high of 13.7% in July from 11.7% in June and 4.9% in July 2021. And in Mexico, consumer prices climbed 0.7% on month and to the greatest on-year pace (8.15%) since late in 2000. Mexican CPI inflation was 5.8% in July 2021.

In U.S. news today, primary elections are being held in Wisconsin, Minnesota, Connecticut and Vermont, and the FBI searched Mar-a-Lago for classified documents that former President Trump is believed to have taken with him there after leaving office. Small business sentiment in the United States recovered modestly in July after June’s big drop to a 112-month low.¬† July’s reading of 89.7 was down from 97.1 back in January.

Mixed Australian data have been reported. A measure of consumer confidence compiled by Westpac dropped to a two-year low this month under the weight of rising inflation and feared interest rate hikes to counter such. But business conditions and business confidence improved in July according to monthly surveys compiled by NAB.

Real GDP in the Philippines contracted 0.1% last quarter following three straight increases. GDP still managed to climb 7.4% year-on-year on top of an even larger 12.1% jump between the second quarters of 2020 and 2021. Separately, the Filipino trade deficit widened to $29.8 billion in the first half of 2022 from $17.9 billion a year earlier.

On-year growth in Japanese machine tool orders of 5.5% in August was down from 17.1% in July and the smallest such advance in a string of 21 results above zero percent.

Industrial production in Malaysia was 12.1% greater than a year earlier in June, its biggest 12-month rise in 13 months.

Indonesian retail sales plunged 11.8% on month in July but were 4.1% above their year-earlier level.

Same store sales in Great Britain were 1.6% greater in July than a year earlier. That broke a string of four straight on-year declines and was the largest 12-month advance since 2.7% last February.

Denmark’s current account widened to a record DKK 28.6 billion surplus¬† in June from DKK 20.6 billion a year earlier.

Just In: U.S. Unit labor costs accelerated from a 1.2% year-on-year increase in the second quarter of 2021 to 9.5% in the second quarter of 2022. Unit labor costs had recorded calendar year increases of 4.5% in 2020 and 3.7% in 2021. The surge in unit labor costs reflects more than wage growth. Labor productivity had risen 2.4% in 2020 followed by 1.9% in 2021 and was 2.2% greater in 2Q 2021 than in 2Q 2020. But productivity dropped 2.5% between 2Q 2021 and last quarter, thanks to back-to-back annualized quarter-to-quarter dives of 7.4% in the first quarter of 2022 and 4.6% in 2Q 2022.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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