Contrasting Inflation Reports from Turkey and Switzerland
March 4, 2024
On this stereotypically quiet Monday, one financial market headline trumpets the first time Japan’s Nikkei-225 equity index closed above 40,000. Such had set a new record high last week for only the first time in over 34 years. The previous closing peak of 38,916 had occurred on Japan’s final business day of 1989. To put today’s milestone in proper perspective, however, one needs only to compare the percentage rise from that earlier peak of 2.8% to the concurrent rise of the Dow Jones Industrials Index, which has been 1,329% from 2732 at the end of 1989.
The more authentic financial market winner this Monday has been the price of Bitcoin, which is trading 3.1% above its pre-weekend close and some 52% above its end-2023 level.
The weighted DXY dollar index dollar today is unchanged so far today, with dips of 0.2% relative to sterling and 0.1% against the euro offset but upticks of 0.2% against the yen and 0.1% versus the Swiss franc and Canadian and Australian dollars.
Ahead of Fed Chairman Powell’s semi-annual congressional testimony on Wednesday and Thursday followed by U.S. labor market data arriving Friday, the 10-year U.S. Treasury yield has risen two basis points overnight. Comparable sovereign debt yields are down, by contrast, 5 basis points in Italy, 4 bps in France and Spain, and 2 basis points in Germany. Investors eagerly await the results of Thursday’s scheduled European Central Bank Governing Council meeting. A rate change is not expected, but the staff’s macroeconomic forecasts will be updated.
Today’s 0.5% rise in Japan’s Nikkei was exceeded by stock market gains of 2.0% in Taiwan and 1.2% in South Korea, but European stocks U.S. stock futures are marginally lower. So are the prices of West Texas Intermediate oil (-0.7%) and gold (-0.2%).
When many countries were struggling with high inflation in the 1970’s, Switzerland stood apart earning the price stability gold medal. In September 1978, for example, when consumer price inflation was 8.3% in the United States, 7.8% in Great Britain, 3.7% in Japan and 2.2% in Germany, the Swiss CPI was a mere 0.8% above its year-earlier level. Swiss policymakers still do a great job of maintaining low and stable prices. The CPI peaked in August 2022 at 3.5% and well below where inflation crested in other industrialized economies, and had fallen back to a 28-month low last month of 1.2%. Core inflation of 1.1% was also less than half its prior cyclical high.
Turkey, on the other hand, has experienced a classic vicious cycle of accelerating domestic inflation and sharp currency deprecation. Turkish February data out today revealed a 15-month high in consumer price inflation of 67.1% versus 38.2% last June and a 5-month high in producer price inflation of 47.2%. On a brighter note, Turkey also reported a January-February trade deficit of $13.2 billion, just half as wide as recorded one year earlier.
February manufacturing purchasing manager indices reported for Singapore and South Korea today printed respectively at a 2-month high of 50.6 and a 2-month low of 50.7.
4Q23 corporate profits in Australia posted their largest quarterly advance (+7.4%) in seven quarters but were still 5.4% softer than in the final quarter of 2022.
Romanian producer prices recorded a record 5.95% year-on-year drop in January. Such was the seventh straight sub-zero percent reading and down from the record high of 53.0% reached in August 2022.
Industrial production in South Korea fell 1.3% in January but still posted their largest 12-month increase (12.9%) in almost three years.
The Sentix gauge of investor sentiment toward Euroland’s economy rose to -10.5 in March from readings of -12.9 in February and a -38.3 in October 2022.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Japanese Nikkei, Price of Bitcoin, Turkish and Swiss CPI
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