Stocks and Bonds Down in Continuing Reaction to U.S. Jobs Leap Last Month
February 6, 2023
Equity markets fell this Monday by 2.0% in Hong Kong, 1.7% in South Korea, 1.3% in Taiwan, and 0.8% in China. The German, French and Spanish stock markets currently exhibit losses above 1.0%, and U.S. stock futures are down between 0.5% and 1.0%.
10-year sovereign debt yields jumped today by 12 basis points in Italy, 10 bps in the U.K. and Spain, 9 bps in France and Germany and 7 basis points in the United States.
The dollar is being supported by the jobs data that will leave the Federal Reserve with little alternative but to keep raising interest rates to avert rising expected inflation. Today’s biggest dollar advance has been at the expense of the Japanese yen, down 0.6% following news that Prime Minister is turning to BOJ Deputy Governor Amamiya to follow Governor Kuroda whose second 5-year term expires next month. The choice of a high central bank official implies a more dovish policy going forward than if an outsider had been picked. It still remains quite possible that the cap on long-term interest rates will have to be watered down further or even abandoned this year.
The Turkish lira hit a new record low of 18.89 per dollar earlier today. There has been a horrific earthquake in Turkey with over 1600 people there and in Syria believed dead. Israel and Lebanon suffered damages, too.
The prices of oil and gold have risen 0.5%. That for Bitcoin had dipped 0.2%.
New Zealand markets were closed for Waitangi Day this Monday, and it is this is the 45th anniversary of the historic blizzard of ’78 that set many records for snowfall in the U.S. Northeast. In sharp contrast, New York is still awaiting its first snow this winter of even as much as half an inch.
Market attention now turns to President Biden’s State of the Union address to be delivered tomorrow, with special interest in what is said about the threat of a U.S. debt default and about China’s audacious spy balloon. Equally important, Federal Reserve Chairman’s speech Tuesday before the Washington Economic Club will be combed for clues to any tweaks in Fed policy in the wake of the January jobs numbers.
Highlights in today’s light data release menu are a larger-than-forecast drop in Euroland retail sales volume (-2.7%), some evidence the the euro area’s construction sector is contracting more slowly, and a surprisingly large 3.2% rebound in German factory orders during December, led by domestic orders for intermediate goods.
Euroland retail sales slumped 2.7% in December. Sales in Germany (-5.3%), the Netherlands (-6.3%), Spain (-1.4%) and France (-1.0%) all fell in volume during the month. Overall euro area sales were 1.1% lower in the fourth quarter than in 3Q and 2.6% lower than in the final quarter of 2021.
Euroland’s construction purchasing managers index rose 3.5 index points in January to a 7-month high but, at 46.1, was still well below the 50 level that separates contraction from expansion. The German, French and Italian construction PMIs rose to 3-, 4- and 2-month highs.
The Sentix gauge of investor confidence toward Euroland rose for a fourth straight time this month to -8 from -17.5 last month and -38.3 in October.
Britain’s construction purchasing managers index, in contrast, slipped to a 32-month low of 48.4 last month. British car sales in January were 14.7% greater than a year earlier.
The Saudi Arabian non-oil PMI printed at a 2-month high of 58.2 last month, while Egypt’s non-oil PMI score was at a 2-month low of 45.5.
Tunisian consumer price inflation of 10.2% in January was the highest in 38 years and up from 6.7% a year earlier. Slovenian CPI inflation slowed 0.8 percentage points to 9.9% after seven straight months in double-digit territory.
The Czech trade deficit widened from CZK 9.0 billion in 2021 to CZK 198 billion last year.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland construction PMI, Euroland retail sales, German factory orders
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