Wait and See
September 12, 2023
Financial markets are marking time ahead of tomorrow’s ECB rate announcement and press conference and the release of U.S. consumer price, producer price and import price data later this week. In spite of speculation that the peak in central bank interest rates may be close at hand, there have been adverse surprises regarding corporate earnings. U.S. share prices have opened with a 0.3% loss. In Asia, Japan’ Nikkei advanced 1.0%, but stock markets closed down by 0.8% in South Korea, 0.4% in India and Hong Kong, and 0.2% in China. Ten-year sovereign debt yields are flat in the U.S., Germany and Japan but four basis points lower in Great Britain. The dollar has strengthened 0.4% against the euro and yen, 0.3% versus sterling and the Australian dollar, and 0.2% relative to the Swiss franc. Crypto has experienced sharp appreciation, and WTI oil advanced 1.7% to a 10-month high after OPEC released projections of global oil demand.
The monthly German ZEW Institute measure of investor sentiment toward Germany went up unexpectedly but was accompanied by a sharp 8.1-point slide in perceived current conditions to a sour reading of -79.4. Regarding the whole euro area economy, sentiment dipped, and the gauge for inflation expectations, now calling for a downtrend, was similar to the previous month’s result.
German wholesale prices rose 0.2% in August but posted a 2.7% year-on-year decline after -2.8% in July and -2.9% in June. WPI inflation had peaked in April 2022 at a record +23.8%.
Spanish consumer price inflation last month was left unrevised from the preliminary estimate of 2.6%. That’s a 3-month high but well down from the 37-year peak of 10.8% in July 2022.
Brazilian CPI inflation of 4.6% in August constitutes a 5-month high. That’s up from a 33-month low of 3.16% in June but still well below the 222-month peak of 12.12% in April 2022.
Portuguese CPI inflation accelerated to a 3-month high of 3.7% in August from 3.1% in July. A 365-month peak of 10.1% was touched last October.
Serbian CPI inflation of 11.5% last month was at a 15-month low and down from the record 16.2% last March.
Indian CPI inflation of 6.83% last month was down from 7.44% in July but still well above the 25-month low of 4.31% in May.
British labor market figures reported today included a 22-month high jobless rate of 4.3%; the largest 3-month decline in employment (-207K) since the third quarter of 2020; the fifth monthly increase in jobless claims in the past six months; and on-year average wage growth (8.5%) that remained close to the record high of 8.8% recorded back in the spring of 2021. Excluding bonuses, regular pay growth of 7.8% remained at its record high.
U.S. small business sentiment dipped 0.6 points below July’s 3-month high to a 2-month low in August.
The Westpac measure of Australian consumer confidence for this month was lower than forecast, but the National Australia Bank’s measures of business conditions and confidence improved slightly.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British labor market statistics, German and Euroland ZEW expectations, German wholesale prices, Indian and Brazilian consumer prices
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