Spotlight Shining on Oil Prices
September 28, 2023
Oil inventory data on Wednesday sent the price of West Texas Intermediate up to a 14-month high of $95.03 per barrel overnight, but the price subsequently settled back and is currently 0.5% below yesterday’s close. Investors or on tenterhooks to see where the oil price heads next.
An additional concern, which has buttressed sovereign debt yields, is the risk of a U.S. government shutdown next week. Ten-year yields today have risen 13 basis points in Great Britain, 10 basis points in Italy, 8 bps in France, Spain and the Netherlands, 7 bps in Germany, and 2 basis points each in the United States and Japan.
Equities closed down 1.5% in Japan, 1.4% in Hong Kong, 1.2% in New Zealand, and 0.9% in India and Australia. But European share prices and U.S. stock futures have shown more resilience.
The weighted U.S. dollar is 0.3% softer, with declines led by the Aussie dollar (-0.7%) and and sterling and the kiwi (-0.6%). The euro and Swiss franc have recovered 0.3%, while the yen is 0.2% stronger.
Gold slipped under $1900 per ounce yesterday and remains below that threshold. Bitcoin is up 0.4%.
Economic sentiment in the euro area slipped less than expected in September but nonetheless registered a 34-month low at 93.3 versus last January’s 7-month high of 99.5. Sentiment in service sector activities dropped to an 11-month low, and the more-than-one-year slide in construction extended further. Consumer confidence was confirmed at the preliminary estimate, which was a 6-month low. The labor market and industrial sector confidence ticked a tad higher, but price expectations rose worryingly.
German consumer price inflation fell sharply to 4.5% in September from 6.1% overall and to 4.6% when excluding food and energy from 5.5% in the month before. Much of the improvement reflected favorable base effects, and the month-on-month rise of the CPI was 0.3% for a fourth straight month. At 4.5%, CPI inflation was at a 19-month low and down from 8.8% last October and November.
Belgian CPI inflation slowed to 2.4% this month from 4.1% in August and a 566-month high of 12.3% last October. In contrast, Spanish CPI inflation accelerated from 2.6% in August to a 5-month high this month of 3.5% (and an even higher core inflation rate of 5.8%). Likewise, Icelandic consumer price inflation rose 0.3 percentage points to 8.0% this month, which represents a 3-month high.
South African producer prices rose a full 1.0% on month and accelerated to a year-on-year increase of 4.3% in August from 2.7% the month before. Still PPI inflation was well below the record high of 18.0% in July 2022.
Italy’s PPI index went up 0.5% on month in August but also posted a record year-on-year drop of 12.2% versus a record on-year advance of 41.7% in September 2022. And in Hungary, PPI inflation slid below zero percent for the first time in 81 months, printing at -2.3%.
Italian manufacturing business confidence and consumer sentiment weakened in September to 34- and 4-month lows.
Dutch business confidence remained at August’s 32-month low in September.
Portuguese consumer sentiment and business confidence dropped to 9- and 2-month lows in September.
Turkish economic sentiment bounced up to a 2-month high from August’s 10-month low.
China’s $146.3 billion current account surplus was 8% smaller in the first half of 2023 than a year earlier.
India’s current account deficit of $10.5 billion in the first half of 2023 was 66% narrower than a year before.
The Czech National Bank left its key 2-week repo rate unchanged at 7.0%, the level since a 125-basis point hike in June 2022. From a pandemic low of 0.25% after 175 basis points of reduction in 2020, the rate was lifted by 350 bps in 2021 and another 325 basis points in the first half of 2022. Consumer price inflation of 18.0% in September 2022 (and most since late 1993) has subsequently receded to a 20-month low of 8.5% last month. That’s still well above the 2% target, which officials hope to be secured by mid-2024.
New U.S. jobless insurance claims rose by a far less-than-expected 2k to 204k last week, attesting to a continuing tight labor market. U.S. GDP growth in the second quarter was left unrevised at 2.1% at an annualized rate, but that revelation masked a large downward revision to personal consumption growth to 0.8% from 1.7% reported earlier. Year-on-year increases in the total and core personal consumption price deflators of 5.9% and 5.1% were close to first-quarter indications and thus still more than double the Fed’s medium-term goal.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Chinese and Indian current accounts, Euroland economic sentiment, German CPI, U.S. GDP
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