November PMIs and Many U.S. Releases Just Before the Thanksgiving Break

November 23, 2022

Japanese are observing their Labor Thanksgiving holiday today, and Americans are getting ready for Thanksgiving, which will see a closure tomorrow and an extended long weekend for many companies.

The dollar fell  overnight by 1.0% against sterling, which crossed above the $1.2000 threshold, up from a 2022 low of $1.0349. The dollar also lost 0.7% against the yen, 0.6% versus the Swiss franc and Aussie dollar, and 0.5% relative to the euro.

Equities are up, while 10-year sovereign debt yields have declined today by 14 basis points  in Italy and the U.K., 8 bps in France and 3 basis points in the United States and Germany. The rise in key U.S. stock indices have been led by technology with the Nasdaq currently showing a 0.8% advance today. Asian stocks advance, but there’s been comparatively little net change in European stocks.

WTI oil slumped 4% in prices, but Bitcoin recovered 1.6%.

The S&P Global-compiled U.S. composite purchasing managers index dropped nearly two index points to a 3-month low of 46.3, according to  preliminary November survey findings and suggesting that GDP growth will be marginally negative this quarter. Manufacturing took a big hit this month, slumping to a 30-month low amid a faster contraction of both production and demand. Depressants included elevated inflation, skilled labor shortages, and tighter financial conditions.

Other U.S. data out today include

  • A 14-week high in new jobless insurance claims last week of 240k.
  • A surprisingly robust 1.0% monthly increase  in durable goods orders in October.
  • A 7.5% rebound in U.S. new home sales last  month. The 30-year fixed mortgage rate fell 23 basis points last week.
  • An upward revision to the U. Michigan November consumer sentiment index, but at 56.8 such wasn’t far above the record low of 50.0 last June.

Euroland’s preliminary composite purchasing managers index for November of 47.8 revealed a somewhat less steep rate of contraction in economic activity, signs of  lessening supply chain disruptions and inflationary pressure. That said, the data show an economy slipping into recession amid inflation that leaves the ECB no choice but to keep tightening. Germany’s PMIs rose to a 2-month high and exceeded street expectations, but the French survey indicated that recent resilience in service sector activities has dissipated. The services PMI dropped 2.3 points through the 50 neutral threshold to a contractionary 20-molnth low of 49.4.

The preliminary British PMI ticked 0.1 point higher to a 2-month high of 48.3, with manufacturing more depressed than services but both sporting sub-50 readings.

Australia’s composite purchasing managers index sank to a 10-month low of 47.7 this month and embodied a 29-month low in manufacturing.

Business confidence in South Africa weakened another index point to a 7-quarter low in 4Q 2022.

Irish consumer confidence fell further to a 2-month low of 45.3 in November.

GDP in Singapore expanded 1.1% on quarter and 4.1% on year during 3Q 2022, but producer price inflation slowed to a 4-month low of 6.7% in November.

South Korean business sentiment firmed to a 2-month high in November.

On the central banking news front,

Although not a surprise to investors, the Reserve Bank of New Zealand official cash rate was increased by a larger 75-basis point increment to 4.25%. The prior five changes had been each an increase of a half percentage point. At the start of the tightening cycle in October 2021, the rate  had been just 0.25%. RBNZ officials expect CPI inflation to rise further and are worried about inflation expectations. The OCR may need to climb an additional 1-1.25 percentage points over the coming year.

The Central Bank of Iceland’s policy interest rate was raised 25 basis points to 6.0%. Tightening there began in May 2021 from 0.75% where such had been since November 2020. 6.0%, the new level, is its highest in 103 months. The pace of increase was reduced at the October meeting to 25 basis points after being lifted 350 bps in four steps earlier this year between February and August. CPI inflation of 9.4% ast of October was up from 4.5% a year earlier.

FOMC minutes from the last U.S. monetary policy review will be released this afternoon. The minutes subsequently identified a several FOMC members expecting that it would be appropriate to reduce the incremental size of the next rate hike in December.

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

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