Chinese Monthly Data Out and Markets Unmoved by G7 Leaders Summit
June 17, 2024
The dollar firmed 0.3% against the yen, Mexican peso and Turkish lira but fell 0.1% against the dollar. Share prices closed down 1.8% in Japan, 1.4% in New Zealand, and 0.6% in China but are modestly firmer in Europe. U.S. stock futures have hardly moved away from Friday closing levels. 10-year sovereign debt yields climbed eight basis points overnight in France where the prospect of big parliamentary gains for the far-right National Front Party in the upcoming snap election continues to weigh on investor sentiment. Other 10-year sovereign debt yields show gains so far today of six basis points in Germany, 4 bps in Great Britain 3 bps in the United States and Italy. The price of Bitcoin slumped 1.3%, and gold is 0.6% less expensive. WTI oil costs 0.4% higher.
Today’s data menu is dominated by the release of Chinese retail sales, industrial production, fixed asset investment, unemployment, and property values in the month of May.
- A 3.7% year-on-year rise in retail sales surpassed expectations but left the year-to-data advance unchanged from the January-April tally of +4.1%. Sales climbed 7.2% in 2023.
- A 5.6% on-year rise in industrial production undershot expectations and trimmed the January-May increase to 6.2% from 6.3% in January-April. That’s till better than 4.6% in all of 2023.
- Fixed asset investment, i.e. business spending, was 4.0% greater in January-May than a year earlier. FAI had posted calendar year increases of 3.6% in 2023 and 5.1% in 2022.
- China’s 5.0% jobless rate last month matched April 5-month low.
- Property prices were 3.9% lower in May than a year earlier, their largest 12-month rate of decline in 107 months.
The need for annual gatherings of the political leaders of the U.S., Germany, Japan, Great Britain, Italy, France and Canada was conceived just a couple of years after the international monetary system switched from fixed dollar parities to mostly market-determined exchange rates and the original purpose of those summits was intended to create a sense of common objectives and market rules that would limit the risk of disorderly currency market conditions and procedures for policy responses to keep currency values aligned with fundamental economic trends. G7 communiques back then could be major market-moving events, but the summits now have transformed into meet-and-greet gatherings to discuss all the geopolitical and economic problems of the world of which there are many, and the meetings no longer carry much importance for currency market participants.
Labor cost growth in the euro area during the first quarter of 2024 was revised upward to 5.1% from 4.9% reported initially. That pace compares with 3.4% in the final quarter of 2023, 5.2% last summer and a peak of 5.9% in the final quarter of 2022.
The service sector purchasing managers index of New Zealand swooned to 43.0 in May from 46.3, signaling the fastest rate of contraction since August 2021. Since at least 2007, only in March, April and May of 2020 did the PMI index also print at a weaker level than 43.
In Japan, core domestic machinery orders, a leading indicator of future business spending, sank 2.9% in April, reversing a 2.9% rise in March and resulting in a rise of just 0.7% compared to April 2023. Export orders rose 21.6% in the latest month, but government orders for machinery plunged 42.4%.
The Swiss government updates macroeconomic forecasts on a quarterly basis, and the latest projections nudged 2024 growth up 0.1 percentage point to 1.2% and consumer price inflation down 0.1 percentage point to 1.4%. Forecasts for 2025 were left unrevised at 1.7% for GDP growth and 1.1% for inflation. Results of the quarterly review of Swiss monetary policy will be reported this Thursday.
The final estimate Italian CPI inflation last month (0.8%) was the same as the preliminary measurement.
This month’s Empire State Manufacturing Survey index printed at a 3-month high of -6.0 after -15.6 in May and also beat analyst expectations.
Housing starts in Canada rose 9.7% in May to a 7-month high.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Chinese retail sales and industrial production, G7 summit statement, Japanese machinery orders
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