Week Ends With a Disappointing U.S. Producer Price Report
December 9, 2022
Some Asian stock markets continued to rally on China’s announced relaxation of Covid restraint measures, which lessens a significant demand depressant in that key economy, but financial markets elsewhere around the world continue to fret over stagflation and the tightening of monetary policies. Next week will be the last one of 2022 before year-end conditions set in, but before then, central bank policy meetings are scheduled in the United States, Britain, Euroland, Norway, Hong Kong, Taiwan, Mexico, Switzerland, Russia and the Philippines. Also, U.S. consumer price data, which arrive Tuesday, figure to be a significant market-moving development.
Share prices rose 2.3% in Hong Kong, 1.2% in Japan, and 1.1% in Taiwan but just 0.3% in China. U.S. and European equities have coughed up earlier gains and are presently narrowly mixed.
Meaningful 10-year sovereign debt increases have occurred already today of 11 basis points in Italy, ten bps in France and Spain, nine bps in Germany, six bps in the U.K., and five basis points in the United States.
The dollar overnight rose 0.7% relative to the Mexican peso, o.4% against the Canadian dollar and 0.2% versus the euro but also fell by 0.3% against the yen and sterling, 0.2% versus the Swiss franc and kiwi and 0.1% vis-a-vis the Chinese yuan.
Prices for WTI oil and gold are 1.2% and 0.4% higher, while that for Bitcoin has dropped o.5%.
U.S. producer prices rose 0.3% in November, the third straight monthly increase of that amount. Analysts were projected a smaller gain and thus disappointed in spite of a 0.7 percentage point decline in the 12-month rate of increase to a year and a half low of 7.4%. A 0.4% monthly increase in service sector producer prices was especially worrisome.
In other price data reported Friday,
- Chinese CPI inflation slowed a half percentage point to an 8-month low of 1.6%, having peaked two months earlier at 2.8%.
- Chinese producer prices were 1.3% lower than a year earlier in November, matching October’s result.
- Brazilian CPI inflation of 5.9% last month was down from 6.5% in October and a 19-year high of 12.1% last April.
- Norwegian CPI inflation, which touched a 35-year peak of 7.5% in October, fell back to a 3-month low of 6.5% last month. Producer price inflation in Norway has dropped from 77.3% in August to 22.3% last month, but the PPI also jumped 5.2% above its October level, underscoring the great volatility as well as excessive level of inflation lately.
- Greek CPI inflation of 8.5% in November was down from 9.1% in October and 12.0% in September.
Although not a market focus anymore, U.S. Covid numbers are again decisively on the rise. The death count hit 937 on December 7th, and yesterday’s number of fresh cases topped 149 thousand. Seven-day averages compared to 14 days earlier show increases of 53%, 35% and 30% for cases, deaths and hospitalizations.
Two other developments making U.S. news are the controversial prisoner swap of basketball player Brittney Griner for a major Russian arms dealer and the defection from the Democratic Party of Arizona Senator Kirsten Sinema. Sinema now presents herself as an Independent, leaving the Dems with the narrowest of margins in the upper house of congress.
GDP in Ukraine grew 9% last quarter but still posted a 30.8% plunge from the same quarter a year earlier.
Chinese motor vehicle sales were 7.9% below their year-earlier level in November.
Belgian industrial production sank 2% on month and 2.8% on year in October. In that same month, Greek industrial output fell 2.5% on year, their biggest slide in a half year, and Spanish industrial production, although up 2.5% on year, registered a monthly decline for a second straight time. Dutch factory output dipped 0.4% on month and to a 3.3% 12-month rate of rise, while Austrian industrial production fell 0.6% on month and recorded the smallest 12-month rise (3.9%) in 20 months.
A 3.7% on-year rise in Indonesian retail sales constitutes a 5-month low.
Capacity utilization in Canada eased back to 82.6% last quarter from a four-year high of 82.8% in the prior quarter.
Just In: The preliminary U. Michigan/Reuters estimate of U.S. consumer sentiment in December, which was expected to be little changed from November’s 56.8 reading, instead like today’s earlier PPI report depicted a more resilient economy. At 59.1, the December level was not far below October’s six-month high of 58.9. Together, these data keep the possibility of a fifth straight 75-basis point interest rate hike by the Federal Reserve, which meets next week.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: China CPI and PPI, U.S. PPI
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