Weak U.S. Data Elicits Investor Relief
August 29, 2023
When inflation reduction is the dominant policy priority, investors hope to see weaker-than-expected data like those released today.
U.S. job openings, job hires, job separations, and job quits were each fewer in July than June; openings fell to a 28-month low.
The Case-Shiller index of house prices in 20 U.S. metropolitan areas recorded a year-on-year decline for a fourth straight month (-1.2% in June), and the FAHA house price index (+0.3% versus May and +3.1% compared to June 2022) was also subdued.
The Conference Board’s monthly U.S. consumer confidence index had been projected likely to extend the11.5-point increase between May and July but instead fell backward by 7.9 points to a 3-month low of 106.1 in August.
Equity markets have strengthened today, and ten-year sovereign debt yields have dropped. Share prices closed up 2.0% in Hong Kong, 1.2% in China, 0.7% in Australia and Taiwan, and 0.2% in Japan. The British FTSE’s gain so far of 1.6% leads the rise major European markets, while the German, French and Italian bourses show gains of between 0.6% and 0.9%. In U.S. trading, the Nasdaq is 1.1% higher, and the DOW and SPX are around 0.5% firmer. Ten-year bond yields have fallen five basis points in Germany, France and Spain and six basis points in the United States.
The price of gold has slipped 0.4% and is just under $80.0 per barrel, while gold and bitcoin prices are up 0.7% and 0.3%.
Aside from rises of 3.2% against the Turkish lira and 1.7% relative to the Russian ruble, overnight net movements in the dollar including dips of 0.2% against the euro and sterling and of 0.1% versus the yen have been unremarkable.
Consumer confidence in Germany fell to a four-month low this month of -25.5 but remains comfortably above last October’s reading of -42.8. French consumer sentiment printed at 85 for a third straight month, otherwise its highest level since April 2022.
Retail sales in Spain rose only 0.2% in July, its smallest monthly gain in five months, but the 12-month rate of increase accelerated to 7.3%. Retail sales in Sweden rose 1.0% in July, best since April but was still 2.1% lower than the July 2022 level. Swedish GDP contracted by less (0.8% on quarter and 1.0% on year during the second quarter) than estimated initially. Revised 2Q Czech GDP figures revealed a 0.1% quarterly uptick but a second straight year-on-year decline of 0.4%.
Austria’s manufacturing purchasing managers index has been below the 50 level that separates expansion from deterioration for 13 straight months. But after printing below the prior month’s reading for six consecutive months and dropping from 48.4 in January to 38.8 in July, the PMI rose to a 4-month high of 40.6 in August.
Economic sentiment in Turkey fell to a 13-month low in August.
Japan’s jobless rate in July, which had been expected to match June’s 2.5%, instead rose to a 4-month high of 2.7%, and the ratio of job applicants to offers fell to a one-year low.
Year-on-year producer price inflation in Singapore was its least negative in July (-8.9%) since February. That was still starkly below +19.2% recorded in July 2022.
Central banks in Kyrgyzstan and Hungary left their interest rate benchmarks unchanged. CPI inflation In Kyrgyzstan had decelerated from an 18-month high of 16.2% in February to a 27-month low of 10.3% last month, while Hungarian CPI inflation has fallen from 25.7% in January to 17.6% last month. The National Bank of Kyrgyzstan’s interest rate has been at 13.0% since a 100-basis point cut last November but remains five percentage points above its end-2021 level of 8.0%. The Central Bank of Hungary’s base rate was progressively increased from a pandemic low of 0.6% to 2.4% at the end of 2021 to 7.75% by mid-2022 and its current level of 13.0% by last September. At the same time, MNB officials since May have been reducing the one-day deposit rate by a percentage point each month. It has dropped from 18% to 14% with the ultimate goal of converging with the base rate level.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: French and German consumer confidence, Japanese unemployment, U.S. house prices, U.S. JOLTS report and consumer confidence
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