Monthend, Quarterend, and a Flood of Rain and Data Reported
September 29, 2023
The 10-year U.S. Treasury yield was at 4.55% just prior to 08:30 EDT, down from Thursday’s intra-day and 194-month high of 4.68%. This respite was aided by some remarks from Fed officials suggesting that coming rate moves have not been decided yet. German, French, Spanish and Italian 10-year sovereign debt yields are 7-8 basis points lower, too, while the British gilt yield softened three bps.
The dollar slipped back 0.4% on a weighted basis, with declines of 0.4% versus the Canadian dollar, 0.5% relative to sterling, 0.1% against the yen and 0.3% vis-a-vis the euro and Swiss franc. Bigger dollar falls of 1.1% and 0.9% happened against the New Zealand and Australian currencies overnight.
U.S. stock futures just prior to the release of the U.S. personal consumption price deflator were positions for a moderate rise at the open. The Hong Kong stock market closed up 2.5%, and European bourses have climbed 0.5-1%, but Japan’s Nikkei closed 0.1% softer following many Japanese data releases and ahead of next week’s BOJ quarterly survey of corporate conditions and expectations.
A lot of price data were reported around the world today that didn’t embody the latest advance of oil prices. West Texas Intermediate crude jumped 1.4% overnight. Prices for gold and bitcoin are up 0.4% and down 0.2%, respectively.
The total and core U.S. PCE price deflator rose just 0.1% month-on-month in August, resulting in a lower-than-expected 12-month rise in the overall index to a 3-month high of 3.5% but a 0.4 percentage point decline in on-year core PCE inflation to a 23-month low of 3.9%. Personal income grew 0.4% on month, most in five months, and so did U.S. personal spending, which had spiked 0.9% in the previous month.
An early estimate of the U.S. merchandise trade deficit in August (-$84.27 billion) would represent the smallest shortfall in five months and only the second smallest gap in a year.
The preliminary report of Euroland consumer price inflation in September is a lower-than-presumed 4.3%, down from 5.2% in August and a peak of 10.6% last October. Core CPI inflation decelerated 0.8 percentage points to a 13-month low of 4.5%. Energy, food, non-energy industrial goods and service sector prices also contributed to September’s slower inflation rate, but such still remains more than double the ECB’s target.
Among other price releases this Friday,
- Tokyo consumer price inflation excluding fresh food dropped to 2.5% in September from 2.8% in August. The index when energy prices are also excluded showed a 12-month rise of 2.4%, down from 2.5%. Tokyo’s data are a good leading indication of overall Japanese inflation released a month later.
- French CPI inflation held steady at 4.9% in September versus market expectations of a modest pick-up. The French producer price index posted its first on-year drop (-1.3%) in August in 32 months, having set a record high of +30% in August 2022.
- Italian CPI inflation dipped 0.1 percentage point to a 20-month low of 5.3% in September, down from a 37-year peak of 11.8% last November.
- Portuguese CPI inflation of 3.6% this month after 3.7% in August was still above July’s 3.1% low but well below the 366-month peak of 10.1% last October.
- Polish CPI inflation fell to a 22-month low of 11.4% in August versus 40.6% in April 2022.
- Belgian producer prices posted another month-on-month drop, this time of 0.4% in August and resulting in a record on-year decline of 11.4%. A record rise of 40.6% had been set in April 2022.
- A 3.0% monthly increase in Greek producer prices, most in ten months, whittled down the 12-month rate of decline to 8.3% in August. Greek PPI inflation had crested just south of 50% in April 2022.
- Austrian producer price inflation swung from a record high of 22.1% a year ago to -2.4% last month.
- Producer price inflation has been sub-zero in Singapore for eight straight months, but the 3.7% year-on-year slide in August was considerably smaller than the extremest deflationary point of -15.3% in May.
- Producer prices in the Philippines were just 0.5% above year-earlier levels in August.
Japanese data releases today showed
- A higher-than-expected 2.7% jobless rate in August, matching July’s 4-month high.
- Stronger-than-forecast on-year 7.0% growth in retail sales, also matching July’s 5-month high rate of rise.
- A six-month low in consumer confidence in September, contrasting with July’s four-year high.
- Unchanged industrial production in August, which was nonetheless 3.8% below its year-earlier level. The recent trend in IP was characterized as “fluctuating indecisively.”
- On-year declines in housing starts and construction orders of 9.4% and 4.3% in August.
The final estimated British GDP growth rate in 2Q 2023 of 0.2% was unrevised from theĀ prior estimate. Year-on-year growth of 0.6% was a tick above 0.5% posted in the first quarter but much slower than 3.9% in 2Q 2022.
Britain’s second quarter current account deficit of GBP 25.3 billion was equal to 3.7% of GDP, but the first-half current account deficit of GBP 40.1 billion was 49% less than in the first half of 2022.
German retail sales volume sank 1.2% on month and 2.3% on year in August. The year-on-year change has been negative since May 2022.
Swedish retail sales edged up 0.2% last month but were 1.7% below their year-earlier level. In Portugal, retail sales were 0.3% softer than a year before, but the Dutch 12-month change in retail sales was 5.9%, by contrast.
Monthly real Canadian GDP growth compiled from the supply side was unchanged in July and just 1.1% above its year-earlier level. Industrial production fell by 0.3% on month and 0.7% on year.
Danish GDP growth last quarter was left unchanged at -0.3%. Year-on-year growth of 0.9% was down from 3.1% in the second quarter of 2022.
Czech GDP growth in 2Q has been revised 0.1 percentage point lower to zero percent. That quarterly move was associated with an on-year drop of 0.6%.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British GDP and current account, Canadian GDP, Euroland CPI, Japanese retail sales and industrial output