Treading Water Ahead of Tonight’s Harris-Trump Debate and Price Data Later in the Week
September 10, 2024
Yesterday’s equity rise was about bottom-fishing. That momentum in financial markets has now dissipated as investors await fresh cues.
Overnight net dollar movements were minimal, limited to 0.1% upticks against the Canadian dollar, Chinese yuan and Mexican peso and downticks of 0.2% relative to the Swiss franc, New Zealand dollar and sterling and of 0.1% versus the Japanese yen and Australian dollar. The euro and Turkish lira are unchanged.
Share prices in the Pacific Rim closed down 0.5% in South Korea, 0.4% in Taiwan, and 0.2% in Japan but up 0.3% in China, Australia and Indonesia. European stock markets have sagged somewhat, and U.S. stock futures are generally steady.
Ten-year sovereign debt yields abroad have risen a basis point in Germany, the U.K., France and Spain. The 10-year Japanese JGB is flat, and the U.S. 10-year Treasury yield has firmed two basis points.
There’s been scant movement in crypto or gold, but WTI oil is 1.1% weaker.
Considering the vastly different domestic and foreign policy agendas of a Trump and Harris presidency, opinion polls depict a very tight race. Tonight’s debate from the battleground state of Pennsylvania is the only one planned between the two candidates and is being viewed has a potential game changer.
The U.S. election is still eight weeks away, but the 2-day FOMC review of U.S. monetary policy starts in a week and is thus the more urgent matter. Price data releases on Wednesday, Thursday, and Friday could seal the fate on whether officials cut the federal funds rate by 25 or 50 basis points next week.
Consumer price data from several other economies were reported earlier today. German inflation last month was left unrevised from the preliminary estimate of a 0.1% month-on-month dip in prices and a 1.9% year-on-year advance, which constitutes the smallest 12-month increase in 41 months. The main depressant in August was a 5.1% on-year drop in energy costs, and food stayed low at just 1.5%. Service sector price inflation, on the other hand, stayed at an unwanted 3.9% for a fourth straight month, allowing core inflation to dip just 0.1 percentage point to 2.8%.
Elsewhere, CPI inflation in Egypt, which crested at 38.0% in August 2023, unexpectedly accelerated half a percentage point to a 2-month high of 26.2% last month from July’s 19-month low.CPI inflation in Hungary fell back to a 38-month low of 3.4% from July’s 7-month high of 4.1% and a peak in January 2023 of 25.7%. Czech CPI inflation of 2.2% last month matched July’s result, which was a touch above June’s recent low of 2.0% but well down from 18.0% in January 2023. Brazilian CPI inflation had risen as high as 5.2% a year ago after decelerating from 12.1% in April 2022 to 3.2% by June 2023, but it has receded anew to 4.2% last month.
Norwegian CPI inflation of 2.6% overall similarly matched June’s recent low and was down from a 7.5% peak in December 2022. The August Danish consumer price inflation rate, 1.4%, is up from 1.1% in July but down from 10.1% in October 2022. Greek CPI inflation accelerated 0.3 percentage points in August to a 4-month high of 3.0%, having peaked at 12.1% in mid-2022, and Moldovan CPI inflation also climbed 0.3 percentage points in August to a 9-month high of 5.1%, still far below the record high of 34.6% clocked in October 2022.
The latest batch of British labor market statistics offers a mixed bag once again. Jobless insurance claims (up 23.7 thousand) rose for a fifth straight time in August, but the average jobless rate in May-July of 4.1% was down from 4.4% in the prior three-month period of February-April. Employment has been rising, and average weekly earnings slid to an overall year-on-year 4.0% increase in May-June (a 44-month low). The wage pace excluding bonuses decelerated to 5.1%.
Industrial production in Italy and Spain respectively fell monthly in July by 0.9% and 0.4%, resulting in 12-month declines of 3.3% and 0.4%. Turkish industrial production bounced 0.4% in July after diving 2.4% in the prior month and was 3.9% lower than in July 2023.
China’s $91.0 billion trade surplus last month exceeded expectations as a result of greater-than-expected exports coupled with lower-than-anticipated imports.
Japanese machine tool orders posted a 3.5% year-on-year drop in August after 12-month rises in the previous three months.
The monthly NAB-compiled measures of Australian business confidence and business conditions undershot expectations, falling in August to respective 9- and 81-month lows.
In yet another sign that the U.S. economy may be slowing, U.S. small business sentiment dropped 2.7 index points to an 8-month low in August.
The Central Bank of Armenia’s key refinancing rate has been lowered by a further 25 basis points to 7.5%. This cut brings the cumulative reduction in 2024 to 175 basis points extending 150 basis points of easing that began in June 2023. The new level is its lowest since November 2021. Consumer price inflation in Armenia, which peaked at 10.3% in mid-2022, overshot the 4.0% medium-term target and still currently resides at 1.3%, which is a 6-month low.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British labor market data, Central Bank of Armenia, U.S. presidential debate
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