Competing Market Forces
April 15, 2024
The dominant theme of the first half of April has been the retreat in hopes that a cycle of Fed interest rate cuts might commence as early as June. This shift is being driven by data pointing to stalled U.S. disinflation and stronger-than-assumed economic growth. Monday’s menu of U.S. data includes
- Stronger-than-expected retail sales that grew 0.7% on month and 4.0% on year in March, led by a 2.1% increase in gas station sales. Note that retail sales are not adjusted for inflation.
- A recovery in the Empire State manufacturing index from a March reading of -20.4 to a 2-month high of -14.3 in April.
- A reading of 51 in the National Association of Homebuilders’ housing index that matched March’s 8-month high.
On the other hand, fears of a full-scale attack of Israel by Iran that rocked the financial community’s mood last week have lessened, and the price of West Texas Intermediate crude oil has settled back 1.3% today. The price of gold is likewise 1.2% lower, and that of Bitcoin tokens have eased a further 0.3%.
The dollar remains well-bid, rising 0.2% as measured by the DXY weighted index that has become firmly planted above 106.
The biggest dollar advances this Monday have been 0.7% against the Japanese yen and 1.0% relative to the New Zealand dollar.
Ten-year sovereign debt yields have made significant upward strides to start the new week, climbing 13 basis points to 4.65% here in the United States and rising by 11 bps in Italy and the U.K., 10 bps in France and Spain and 9 basis points in Germany.
Among other economic data reported around the world today, Japanese core private domestic machinery orders roared back 7.7% in February, their biggest monthly gain in 13 months, after dropping by 1.3% in the last quarter of 2023 and by 1.7% in January.
New Zealand’s service sector purchasing managers index slumped 5.1 index points to a 26-month low of 47.5. This near matched the rate of contraction in manufacturing, whose PMI reading of 47.1 was reported just before the weekend.
Industrial production in the euro area rose 0.8% in February but was associated with a hefty year-on-year decline of 6.4%.
Canadian factory orders and shipments advanced month-on-month in February by 1.9% and 0.7%.
India’s trade deficit of $51.8 billion in the first quarter of 2024 was nearly identical to that in the first quarter of 2023.
Turkey’s 8.7% jobless rate in February was 0.3 percentage points lower than in January, also the lowest since 8.6% in October and down from 10.7% in February 2023, 13.2% in February 2022 and a cyclical high of 14.1% in July 2020.
Consumer price inflation fell in March to a 31-month low of 2.2% in Finland, a 34-month low of 2.3% in Slovakia, a 59-month low of 2.0% in Poland, and a 32-month low of 3.0% in Bulgaria. Previous cyclical peaks of inflation in those four economies had occurred at 9.1%, 15.4%, 18.4% and 18.7%.
Wholesale price inflation in India of 0.53% last month rose to a 3-month high after a reading of -1.59% in February. Fuel, food, and manufacturing each contributed to the smaller on-year drop in India’s WPI.
The combined Swiss producer and import price index ticked just 0.1% higher last month while posting a 2.1% on-year decline. Domestic producer prices were 1.1% lower than in March 2023, while a 5.4% drop import prices matched February’s result.
Danish PPI inflation slowed to 1.3% in February from 1.7% in January.
The common theme in all these price data releases is that other countries seem to be have more success in 2024 extending disinflation than has the U.S. experience, and that makes sense because America has avoided the recessionary conditions experienced by Europe.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Indian wholesale prices, Japanese machinery orders, Swiss producer prices., U.S. retail sales
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