Some Upside Data Surprises and Kyrgyzstan’s First Central Bank Rate Cut Since May 2019
November 29, 2022
The dollar traded lower this Tuesday and has so far lost 1.2% against the Aussie dollar, 1.0% relative to the kiwi, 0.8% versus the Mexican peso, 0.7% vis-a-vis the Chinese yuan, 0.5% against the yen and sterling and 0.3% versus the euro and loonie. The Swiss franc edged 0.1% higher, in contrast.
A report out of China that seniors are getting Covid vaccinations at a faster pace has renewed hope that restrictions on social gathering may be relaxed early next year. Equity markets jumped in response by 5.2% in Hong Kong, 2.3% in China, 1.1% in Taiwan and Singapore, and 1.0% in South Korea, underscoring the sensitivity of financial market sentiment to the evolution of China policy on Covid. China’s economic slowdown has been particularly pronounced in construction, and the October Chinese indices of leading and coincident economic indicators sank 0.5% and 0.9%, respectively.
European stock markets are mostly up but by less than 1%. There’s been little net movement in U.S. share prices after Monday’s big drop.
Ten-year sovereign debt yields fell six basis points in Italy and five bps in France, Spain and Germany. But with a number of Federal Reserve officials conveying a hawkish mood, the 10-year Treasury yield rose five basis points.
Prices for WTI oil, Bitcoin and gold are 2.7%, 1.2% and 0.8% higher so far today.
The National Bank of Kyrgyzstan‘s policy interest rate was cut a full percentage point to 13.0%. This decline breaks a string of eight increases dating back to before the pandemic’s onset that collectively lifted the rate level from 4.25% to 14.0% and which had been culminated last March with a 400-basis point hike. CPI inflation in Kyrgyzstan had peaked at 15.6% in September — the most since July 2011 — but then slipped back to 15.4% in October and 14.5% in November.
Economic sentiment in the euro area improved month-on-month in November for the first time since February. With a reading of 93.7 after 92.7, however, the ESI remained very depressed compared to 114.0 at the end of 2021, and the report embodied a ninth straight slide in the industrial sector.
German consumer price inflation surprisingly slowed 0.4 percentage points to a 2-month low of 10.0% in November, thanks to a 0.5% month-on-month drop in the CPI index. Lessening inflation in energy and the service sector outweighed a further acceleration in food costs.
Italian producer prices in November fell 3.3% on month (the most ever) and to a 28% 12-month rate of increase from 41.7% in both September and October.
Greek business sentiment and consumer confidence recovered to 2-month highs in November, but in Portugal business sentiment and consumer confidence punched in at their weakest readings in 18 months and 110 months, respectively.
Icelandic CPI inflation edged down to a 2-month low of 9.3% in November, and producer price inflation in October fell much more sharply to an 18-month low of 7.0% after 13.6% in the prior month.
Belgian CPI inflation slowed to a 3-month low of 10.6% this month from a 47-year high in October.
Swiss GDP rose 0.2% last quarter, a tad less than forecast, and the on-year growth rate fell to only 0.5% from 2.2% in the second quarter and 4.7% in the first quarter.
In Sweden, consumer confidence bounced above October’s 358-month low to a 3-month high in November. A trade deficit of SEK 9.5 billion in October compared unfavorably to one of just 0.6 billion kroner a year earlier, and a 7.7% year-on-year drop of retail sales in October was the sharpest slide in around three decades.
A 4.3% on-year rise in Japanese retail sales last month was less than forecast. Japan’s jobless rate (2.6% in October) has fluctuated between that level and 2.5% since last March.
PPI inflation in Singapore decelerated to a a 33-month low of 8.5% in October. In Vietnam, CPI inflation hit a 32-month high this month, but the 4.4% pace was low by global standards.
Turning to North America, Canadian real GDP rose 0.7% in the third quarter, or 2.9% at an annualized pace, and was 3.9% above the level in the third quarter of 2021. Monthly GDP compiled from the supply side slowed in September to a 0.1% uptick versus August but was also 3.9% above its year-earlier level. Industrial production climbed 0.2% on month and 4.6% on year.
Mexico’s jobless rate of 3.3% last month was down from 3.9% in October 2021.
U.S. house price inflation slowed in September to 11.0%, a 23-month low, measured by the FHFA index and to 10.4%, a 21-month low, measured by the Case-Shiller index of 20 metropolitan areas. The Conference Board’s U.S. consumer confidence index fell two index points to a 4-month low in November.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Canadian GDP, China and Covid, Euroland economic sentiment, Japanese retail sales and unemployment, National Bank of Krygyzstan, Swiss GDP, U.S. consumer confidence
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