Additional Significant Retreat in Long-Term Interest Rates
October 11, 2023
Amid war in the Mideast and hopes that the federal funds target may not have to climb further, ten-year sovereign debt yields fell overnight by nine basis points in the United States and Great Britain, seven bps in France and Spain, six bps in Germany and Italy and two basis points in Japan. The 30-year Treasury yield touched 4.705%, 30 basis points beneath its recent peak.
Stock markets are taking a trust-but-verify approach to the possibility of a less hawkish central bank stance, preferring to see what today’s released minutes of the last FOMC meeting show. There is also the hurdle of released U.S. producer price data later today, followed by U.S. consumer prices tomorrow and import price figures on Friday to get through. U.S. stock futures are up but only barely after Tuesday’s session in which early gains were appreciably trimmed by the close. European share prices are mixed so far this Wednesday: up 0.3% and 0.1% in Italy and the U.K, flat in Germany and 0.6% softer in France. The mood in the Pacific Rim was brighter on continuing speculation that China is about to unveil a big infrastructure stimulus.
The dollar in overnight trading stayed steady on balance against the euro and sterling, rose 0.3% against the kiwi and 0.1% relative to the Canadian and Australian dollars but has slipped 0.3% vis-a-vis the peso, 0.2% relative to the Swiss franc and 0.1% against the Japanese yen. Gold‘s price strengthened 0.5%, but costs for oil and bitcoin are down 0.4% and 0.5%.
Data released overseas today have been minimal and inconsequential. Preliminary German consumer price figures for September were left unchanged, showing a fourth straight 0.3% monthly advance and a 19-month low in their 12-month rate of advance to 4.5%, which is down from a peak of 8.8% in October-November 2022. Core CPI inflation of 4.6% was at a 1-year low and down from 5.5% in July and August.
A separate release of what consumers anticipate inflation will be over the coming year in the euro area ticked 0.1 percentage point above the 16-month low of 3.4% in June and July but was down from 5.4% in October 2022.
Chinese motor vehicle sales were 9.5% greater in September than a year earlier. That exceeded the on-year increases of 8.0% in January-August and just 2.1% in full-2022.
Nominal Turkish retail sales sank 4.7% in August, resulting in a reduced 17.2% year-on-year advance. That implies a substantial real decline in sales when set against the 58.9% rate of CPI inflation reported for August.
An 11.2% year-on-year drop in Japanese machine tool orders in September was the smallest decline so far this year.
In addition to the aforementioned U.S. PPI report due later this morning, investors will learn today the size of the U.S. budget deficit in September and last fiscal year. Republicans in the House of Representatives remain far apart in the process of settling on a Speaker who could get ample support to be selected without Democratic Party help. FOMC minutes, Canadian building permits, and Russian consumer prices data are due today as well.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
ShareThis
