It’s Friday, and Mostly Calm Reigns Over Financial Markets
February 9, 2024
The weighted DXY dollar index is unchanged from Thursday’s close, with downticks of 0.7% against the kiwi and 0.3% versus the Australian dollar and Mexican peso but 0.1% upticks relative to the euro, yen and sterling.
The only significant stock market moves so far today involve China and Pakistan. The Shanghai Composite closed up 1.3% ahead of the week-long holiday ushering in the new year of the dragon and in continuing reaction to pro-growth policy moves promised by the government. Pakistanis are on tenterhooks awaiting the result of yesterday’s parliamentary election. Amid today’s suspenseful mood, equities there fell by almost 4% at one point but closed ultimately down just 1.8%.
The ten-year U.S. Treasury and Japanese JGB yields inched up one and two basis points overnight, while German and British comparable yields held steady.
Prices for bitcoin and oil surged 4.1% and 3.9%, but gold has seen little action.
Varied outlooks for monetary policies around the world continue to command close investor attention and have a top differentiating factor in financial markets.
- Policymakers at the Federal Reserve and European Central Bank are showing hardly any urgency to begin easing interest rates.
- The Bank of Japan’s policy hovers at the other end of the spectrum, with officials conceding it’s no longer premature to begin discussing tightening moves since the economy is expanding and positive inflation seems more secure. Still, BOJ officials show no readiness to normalize their stance in big chunks and do not seem especially worried about the softer yen.
- The Reserve Bank of New Zealand’s monetary policy also seems to be a candidate for additional rate hike, and this possibility has given the kiwi some lift.
- Central bank interest rates in Poland, Thailand, Iceland, India, Mexico and Serbia were left unchanged yesterday.
- But cuts of 50 basis points each were undertaken by the Czech National Bank and Central Reserve Bank of Peru. In each of those cases, it was not an initial reduction. The CNB’s 2-week repo rate had been reduced by 25 basis points at the prior review in December, and Peru’s benchmark cut was the sixth in a monthly streak started last September.
Several countries reported December industrial production figures today. They have been mostly upbeat at least from a month-on-month standpoint. In that context, output went up 4.7% in Belgium, 1.1% in Italy, 0.7% in Greece, 2.4% in Turkey, 23.5% in Ireland, 3.3% in Bulgaria, 3.1% in Slovakia, 1.4% in Sweden, but fell 0.6% in Austria. Compared to December 2022 levels, production fell by a lesser 2.9% in Belgium, 5.6% in Austria, 0.1% in Slovakia, 6.9% in Bulgaria and 2.1% in Italy, while rising 40.5% in Ireland, 1.9% in Turkey, and 0.1% in Sweden.
In today’s menu of price data releases,
- Latvian consumer price inflation bounced off December’s 32-month low of 0.6% in December to print at 0.9% in January, still well below the record high of 22.2% in September 2022.
- Norwegian CPI inflation slid 0.1 percentage point to a 3-month low of 4.7% last month. Producer prices in January were 12.9% below year-earlier levels in Norway.
- The preliminary estimate of German consumer price inflation was left unrevised at 2.9% in January, which constitutes a 31-month low, half as much as 6.2% just six months earlier, and down from the record 10.4% in October 2022. Although the 12-month rise in services components of the CPI index accelerated 0.2 percentage points to 3.4%, core CPI inflation, which covers all non-food and energy elements of the index, fell marginally further to a 19-month low of also 3.4%.
On-year growth in the Chinese M2 stock of money slowed in December to a 26-month low of 8.7%, but the CNY 4.92 trillion total of new yuan loans represented the biggest monthly amount ever.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Reserve Bank of Peru, German CPI, Pakistan election
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