Spotlight on China and Japan
January 16, 2023
Without U.S. market leadership today due to America’s Martin Luther King’s Birthday holiday, this should be a pretty uneventful start to the third week of January. The two major themes are continuing anticipation of a demand boost from China’s abandonment of zero tolerance for Covid and elevated speculation that the Bank of Japan Board will loosen yield curve control further at this week’s policy review. The two-day policy review begins tomorrow and will coincide with the publication of the quarterly Outlook for Economic Activity and Prices. At the December Board meeting, the permitted daily ceiling rate on the 10-year Japanese Government Bond yields was doubled to 0.50%, and heavy BOJ JGB purchases since then have not kept the rate level from hovering at the new ceiling.
The dollar strengthened overnight by 0.4% against the yuan, yen and edged up by a lesser 0.2% versus the euro and 0.1% relative to the Swiss franc.
Ten-year sovereign debt yields have increased four basis points in the U.K. and Italy and two basis points each in Germany, France, and Spain.
Stock markets in the Pacific Rim closed mixed with drops of 1.8% in Indonesia and 1.1% in Japan but rallies of 1.3% in Singapore, 1.0% in China, 0.8% in Australia and 0.7% in Taiwan. There’s been scant net movement in European share prices.
Gold is trading near a 9-month high, and at $1917 per ounce is within hailing of its record peak of $2070 touched in March 2022 not long after the Russian invasion of Ukraine began. Bitcoin’s price has dipped 0.2%, and WTI oil is 0.5% lower.
Wholesale price inflation in India slowed almost a full percentage point in India last month to a 22-month low of 4.95%. Such had crested at 16.6% last May and ended 2021 with a 13.6% reading.
German wholesale prices recorded a third consecutive monthly decrease in December, and the 1.6% drop was bigger than those in October and November. The 12-month WPI rate of increase as a consequence slowed to a 16-month low of 12.8% from a record high of 23.8% last April.
Japanese domestic producer price inflation accelerated half a percentage point last month to a 3-month high of 10.2%, which compares with 8.6% a year earlier. Import price inflation, on the other hand, has subsided to 22.8% from 48.5% last September and 40.2% a year ago.
Consumer price inflation in Bulgaria held steady in December at November’s 5-month low of 16.9%, having crested in September at 18.7%.
Consumer price inflation in Kyrgyzstan last month of 14.7% was down from 15.0% in November and a record high in August of 15.6% but still above the December 2021 reading of 11.2%.
Senegalese CPI inflation settled back from November’s peak of 14.1% to a 3-month low of 12.8%.
House prices in China were lower than year-earlier levels in the final two months of 2022.
Indonesia’s trade surplus narrowed to a 7-month low of $3.9 billion in December, but the full-2022 surplus of $54.5 billion was about 50% wider than the surplus in 2021.
Norway’s trade surplus of NOK 149 billion last month was the biggest since August. Reflecting higher oil prices in this energy exporter, the full-2022 surplus of NOK 1.374 trillion was up considerably from NOK 531 billion in 2021 and 13.5 billion kroner in 2020.
As an importer of energy, India experienced a $229 billion trade deficit in the first three quarters of the current fiscal year (i.e., April-December) compared to a gap of $141 billion a year earlier.
After back-to-back year-on-year declines in Japanese machine tool orders during October and November, such returned to the black in December, but the 1.0% increase in the last month was well down from the recent peak in May 2021 of 141.9%.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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