Markets React With Caution to Biden’s Withdrawal from Presidential Race
July 22, 2024
The dollar fell 0.5% overnight against the Japanese yen and rose 0.4% relative to the Australian dollar, but other key dollar relationships held much steadier. EUR/USD is unchanged. The Mexican peso likewise hasn’t moved. The dollar slid 0.2% against sterling and 0.1% relative to the Swiss franc but rose 0.1% vis-a-vis the Canadian currency.
Stock markets in the Pacific Rim fell by 2.7% in Taiwan, 0.6% in China, 1.1% in South Korea and 1.2% in Japan but climbed 1.3% in Hong Kong. Moreover, major European equity indices strengthened, including 1.4% so far in both the Paris CAC and German DAX, and U.S. stock futures are higher, too.
Ten-year sovereign debt yield changes have been marginal, with dips of 2 and 1 basis points in the U.S. and Germany, a 1-basis point uptick in Japan and no change in the British gilt yield.
Bitcoin and oil prices are down 1.2% and 0.5%, while gold has firmed 0.3%.
Trump still leads in the opinion polls against Harris and other possible Democratic contenders for the nomination, but the Republican candidate’s advantage looks narrower. Two significant drains on the Democratic Party’s prospects have been neutered. In one of these instances, the issue of age may even flip to a Republican disadvantage. The other removed issue is the matter of Hunter Biden’s conviction.
On the question of policy stances, the early consensus is that the change of Democratic standard bearer will have little impact. That probably understates reality. Four years ago, Biden ran as a Democratic Party centrist, yet his skill in forging legislative deals enabled him to achieve far more than party leaders from the more progressive wing. Keys to the election outcome will be the Dem’s VP choice, how unified the party is behind the candidates that emerge on the ticket, and of course how effectively the Democratic Party can present to voters an easily understood and compelling vision in what they want to accomplish over the coming four years.
Today’s big economic policy news has been an unexpected 10-basis point reduction in the People’s Bank of China one-year and five-year loan prime rates to 3.35% and 3.85%, respectively. This decision followed lackluster Chinese data and uninspiring initially announced actions to emerge from last week’s Third Plenum that dealt with broad plans for the coming five years.
Quite a few countries reported price data this Monday.
- Lebanese consumer price inflation decelerated almost ten percentage points in June to a 51-month low of 41.8%, having peaked at 268.8% in April 2023.
- Irish wholesale price inflation tripled from a 7-month low in May of 0.9% to 2-month high of 2.8% in June. That’s still well below 8.8% at the end of 2022.
- Icelandic producer prices posted a third straight monthly jump of more than 1% in June, catapulting the 12-month rate of increase to a 16-month high of 4.7% from 2.3% in May, 1.0% in April and -3.7% in March.
- In Hong Kong, CPI inflation rose from a 35-month low of 1.2% in May to a 3-month high of 1.5% in June. That’s just a third as high as the 4.4% on-year peak in September 2022.
- In Morocco, consumer price inflation quadrupled to a 3-month high of 1.8% last month.
- Estonian producer prices registered their smallest year-on-year decline in a 13-month-long deflationary sequence, just -0.5% in June.
- Moldovan producer price inflation was negative every month in the first half of 2024. A 3.8% on-year PPI drop in March was the biggest decline, and the on-year slide of 0.8% was the smallest since an on-year increase of 1.4% in December 2023.
Belgian consumer sentiment dropped four index points to a 2-month low in July of -5.
New Zealand’s NZD 699 million trade surplus in June compares to a deficit of NZD 115 million a year earlier, and the NZD 179 million deficit in the first half of this year was far below the shortfall of NZD 4.4 billion in the first half of 2023.
The Chicago Fed National Activity index fell .18 index points to a 2-month low in June of 0.05 from an upwardly revised 3-month high in May.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Biden ends bid for second term, Lebanese CPI, Peoples Bank of China
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