More Evidence of Slower Inflation Reported
April 13, 2023
Ahead of the U.S. producer price data releases, ten-year sovereign bond yields were sporting increases of 4 basis points in the United States and two basis points in Germany, France and Great Britain. The 10-year Japanese JGB yield, in contrast, had eased two basis points.
The dollar is softer, with losses of 0.7% against the Australian dollar and Swiss franc, 0.4% versus the loonie and kiwi, and 0.2% relative to sterling, the euro and measured by the weighted DXY index.
At $2,041 per troy ounce, the price of gold is up 0.8% and just 1.6% below its alltime peak in August 2020.
Bitcoin’s price, up 1.0% overnight, has been the biggest winner so far in 2023.
Equity markets closed up 0.3% in Japan and down 0.3% in China. Most U.S. and European stock markets show inconsequential changes from Wednesday.
Australia’s labor market was hotter than assumed in March. The jobless rate defied expectations of an uptick and stayed at 3.5%. Jobs jumped 53k, and labor participation improved, too.
German consumer price inflation fell to a 7-month low of 7.4% in March after 8.7% readings in the first two months of this year. Portuguese CPI inflation was also 7.4% last month, an 11 month low and down from 8.2% in February and a 365-month high of 10.1% last October. Irish, and Czech CPI inflation in March of 7.7% and 15.0% represented 11-month lows as well. Dutch CPI inflation dropped nearly in half to 4.4% in March from 8.0% in February and a record high of 14.5% last September. In Romania consumer price inflation decelerated a full percentage point to 14.5% in March, lowest since last May.
A greater-than-forecast 1.5% rise in Euroland industrial production in February was the most in six months but associated with a 12-month increase of just 2.0%.
British month-on-month GDP growth slowed to a weaker-than-projected zero percent in February, resulting in a 3-month average pace of just 0.1%. British industrial production that month sank 0.2% on month and 2.3% on year, while construction recovered 2.4% on month and to a 4-month high year-on-year increase of 5.7%. Trade deficits of GBP 17.519 billion in merchandise and GBP 4.805 billion for both goods and services were recorded in the U.K. during February.
FOMC minutes released yesterday afternoon opined that longer-dated U.S. Treasury yields typically reach their highest level somewhat before a Federal Reserve interest rate tightening cycle ends but do now embark on a significant downward path until sometime after Fed tightening is over.
U.S. producer price inflation slowed to a lower than expected 2.7% in March from 4.9% in February, 6.6% at end-2022, 9.5% last September, 11.2% at mid-2022 and 11.7% in March 2022.
There were 239 new U.S. jobless insurance claims filed last week. The weekly average of 240k claims over the past four weeks was up from a low of 190.5k in the four weeks to September 24, 2022. This rise depicts a labor market that has become less taut but remains tighter than Fed officials hope to see in coming months. Both this report and the aforementioned PPI data support the consensus in the market that monetary officials will likely raise the federal funds target by 25 basis points next month.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British trade and industrial output, Euroland industrial production, U.S. PPI and jobless insurance claims
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