Next Week

Next Week

Next Week

December 15, 2017

Central Banks: Monetary policy meetings are scheduled in Japan, Sweden, Thailand, the Czech Republic, and Hungary. Minutes from this month’s meeting of the Reserve Bank of Australia will be published (note that January is the one month each year when the RBA doesn’t have a scheduled policy review). Bank of Japan Governor Kuroda and Bank of England Governor Carney will be speaking publicly.

Holiday: Some markets such as Britain’s close early on Friday in observance of Christmas Eve, which falls on Sunday.

Scheduled U.S. Statistical Releases: Even in the week before Christmas, the data release calendar is a meaty one, featuring quarterly GDP and current account figures, monthly checks on personal income and spending, the PCE price deflator, housing starts, building permits, new and existing home sales, the National Association of Home Builders housing index, durable goods orders, the Philly Fed and Kansas City Fed manufacturing surveys, the Chicago Fed National Activity Index, the Conference Board and U. Michigan consumer confidence indices, the index of leading economic indicators, and weekly jobless insurance claims, consumer comfort, mortgage applications, energy inventories, and chain store sales.

Euroland-Wide Data: Consumer prices, the current account, consumer confidence, the index of leading economic indicators, construction output, and quarterly labor costs.

Members of the Euro Area: French, German, Portuguese, Spanish and Finnish producer prices. IFO index of German business climate as well as German import prices and consumer sentiment. French GDP, business sentiment, consumer spending and index of leading economic indicators. Italian, Dutch, and Greek current accounts. Itaian and Spanish trade balances. Belgian business and consumer confidence. Austrian CPI, Dutch GDP, and Cypriot unemployment.

U.K. and Switzerland: British GDP, current account, consumer confidence, public sector borrowing, and the industrial trends and distributive trades monthly survey results. Swiss trade, money growth, index of leading economic indicators, and new government macroeconomic forecasts.

Eastern Europe: Hungary’s current account, Czech producer prices and Polish retail sales and industrial production.

Nordic Europe: Swedish retail sales and consumer confidence. Swedish and Icelandic producer prices. Icelandic consumer prices and wages. Danish GDP and Norwegian unemployment.

Japan and China: Japanese all industry index, customs trade, department store and supermarket sales, and machine tool orders. Chinese house prices and index of leading economic indicators.

Selected Other Asian Statistics: Hong Kong and Malaysian unemployment and consumer prices. South Korea’s PPI, India’s index of leading economic indicators, and Singapore trade.

Australia and New Zealand: Australian motor vehicle slaes, index of leading economic indicators, and midyear economic and fiscal outlook. New Zealand’s Performance of Services index, current account, trade balance, consumer confidence, and business sentiment.

Canada, Mexico and Brazil: Canadian and Mexican retail sales and wholesale turnover. Canadian GDP, Mexican unemployment, and Brazilian consumer confidence and current account.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

 

Tags: Economic Data Calendar




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FOMC Statement and Forecasts

FOMC Statement and Forecasts

FOMC Statement and Forecasts

December 13, 2017

The FOMC met market expectations in raising the federal funds rate by an as-expected 25 basis points to 1.25-1.50%. But the vote was 7-2, with Chicago Fed President Evans joining Minneapolis Fed President Kashkari in favoring no change in the rate. A fairly upbeat statement observes that unemployment (now 4.1%) has declined further and that growth in jobs and overall GDP have been solid. The policy stance is still considered accommodative, and forward guidance stipulates that

The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

Inflation is still running below the 2.0% target, and both market-based compensation for inflation and survey-based measures of expected inflation are low and little changed.

Released updated growth and inflation projections, which the FOMC does quarterly, revised projected GDP growth upward by 0.4 percentage points to 2.5%, presumably to account for fiscal tax cuts, but leave inflation forecasts of 1.9% next year and 2.0% in both 2019 and 2020 unchanged.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: FOMC statement and forecasts




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Strong U.S., Japanese, Chinese, French and Canadian Data Reported and Brexit Talks Take a Step Forward

Strong U.S., Japanese, Chinese, French and Canadian Data Reported and Brexit Talks Take a Step Forward

Strong U.S., Japanese, Chinese, French and Canadian Data Reported and Brexit Talks Take a Step Forward

December 8, 2017

There have been some impressive stock market advances overnight in Asia (Japan 1.4%, Hong Kong 1.7%, Singapore 1.1%, and India 0.9) and Europe (Italy 1.3%, Germany 0.9%, Spain 0.8% and the U.K. 0.7%). The S&P is 0.4% firmer in early U.S. trading.

The dollar is closing out the week on a high note, having risen today 0.5% relative to sterling, 0.3% versus the yen and 0.2% against the euro.

The ten-year British gilt yield climbed 4 basis points, and its German and U.S. counterparts are a basis point firmer.

West Texas Intermediate crude oil climbed 0.9% to $57.22 per barrel. Comex gold at $1,252.20 per ounce is little changed.

British negotiators worked out a deal with the EU to begin talks on the nature of post-Brexit economic arrangements. This constitutes rare good news for Prime Minister Theresa May.

U.S. non-farm payroll jobs increased more than 200K for a second straight month in November, rising by a greater-than-forecast 228K after a 244K increase in October. The jobless rate stayed at 4.1%. Weekly hours worked ticked up to 34.5 hours. Average hourly earnings rose 0.2% on month and were 2.5% above the year-earlier level.

Japanese quarterly real GDP growth in 3Q got revised upward by 0.9 percentage points to 2.5% annualized. Non-residential investment grew 4.3% instead of 1.0% as estimated initially, and government spending exerted a smaller drag than first thought. Real GDP was 2.1% greater than  in the third quarter of 2016, but the GDP price deflator posted only a 0.1% on-year uptick.

Japan’s economy watchers index went up another 2.9 points to a reading of 55.2 in November, the best in well over a year. Bankruptcies in November were 2.3% fewer than a year earlier in contrast to increases in both September and October.

China’s trade surplus climbed to a 3-month high of $40.21 billion in November on the first double-digit on-year advance of exports since June.

French industrial production in October had been projected to stagnated but instead jumped 1.9% on top of a 0.8% monthly rise in September. This left output in the latest three reported months 1.1% greater than in the prior three months and showing a solid 3.2% on-year increase.

Canadian housing starts swelled to a 67-month peak of 252.2K in November, and capacity utilization in the third quarter of 85.0% was the most in a decade.

The German seasonally adjusted trade surplus of EUR 19.8 billion in October was only a tad less than the January-September average of EUR 20.4 billion per months and last year’s mean of EUR 20.7 billion. Exports fell 0.4% on month but rose by a decent 6.8% on year. The unadjusted current account surplus of EUR 18.1 billion in October compares to a surplus of EUR 18.4 billion a year earlier.German labor cost pressure remained benign last quarter in posting an on-year increase of just 2.2%.

British data reported today were mixed. Industrial production in October was unchanged from September, and construction output registered an unexpected and large monthly slide of 1.7%. However, trade deficits in October of GBP 10.781 billion on merchandise and GBP 1.405 billion on goods and services combined were smaller than assumed.

In the year to November, consumer prices rose 2.8% in Brazil, 2.5% in Hungary, and 1.1% in Greece.

Spain’s indices of leading and coincident economic indicators rose 0.3% and 0.1%, respectively, in October.

Icelandic GDP posted a quarterly 2.2% advance in 3Q that yielded a 3.1% increase from a year earlier.

Turkish retail sales and industrial production recorded October-over-October advances of 2.4% and 7.3%.

The University of Michigan/Reuters index of U.S. consumer sentiment dropped to a 3-month low of 96.8 in December from 98.5 in November and 100.7 in September, reflecting in part the middle class misgivings about the tax cut legislation and Republican intentions to reduce entitlement programs next year. President Trump’s voter approval rating has dropped to a new low of 32%.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: foreign exchange, German and British trade, Japanese GDP, U.S. labor force survey




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Next Week

Next Week

Next Week

December 8, 2017

Central Banks: The Fed, ECB and Bank of England lead a long list of central banks holding their final monetary policy reviews of 2017. Other countries on the list are Switzerland, Russia, Norway, Iceland, Indonesia, Ukraine, Mexico, Peru, Chile, Turkey and Colombia. Yellen of the Fed, Kuroda of the Bank of Japan, Draghi of the ECB, Poloz of the Bank of Canada, Lowe of the Reserve Bank of Australia, and Carney and Haldane of the Bank of England speak  publicly.

Holiday and Special Event: On Tuesday Mexico observes Virgin of Guadalupe holiday, and Alabama holds a senatorial election to fill Attorney General Sessions’ vacancy.

Scheduled U.S. Statistical Releases: CPI, PPI, retail sales, industrial production, capacity usage, import prices, small business sentiment, Empire State manufacturing index, JOLTS index of labor market hires, openings and separations, FAHA house price index, index of leading economic indicators, National Association of Home Builders housing market index, federal monthly budget, Treasury-compiled capital flows, and weekly chain store sales, jobless insurance claims, mortgage applications, consumer comfort and energy inventories.

Japanese and Chinese Data: Bank of Japan quarterly Tankan survey of corporate conditions and expectations will be published Friday. Other data in the week include Japanese machinery orders, machine tool orders, tertiary index, corporate goods prices, revised industrial production, capacity use, business sentiment, preliminary manufacturing purchasing manufacturers index, and money growth. China releases monthly CPI, PPI, retail sales, industrial production, fixed asset investment, money growth and bank lending.

Selected Other Asia Releases: Filipino and Indonesian trade balances. Malaysian and Hong Kong industrial output. Indian and Filipino unemployment. Indian WPI, Filipino current account, Indian CPI, Singaporean retail sales, and South Korea’s index of leading economic indicators.

Euroland Data: Industrial production, preliminary PMI, trade surplus, employment, ZEW index of investor expectations, and car sales.

Members of the Euro Area: German, French, Spanish, Italian, Irish, and Portuguese consumer prices. German and French preliminary purchasing manager survey results. Italian and Dutch retail sales. Irish, Belgian, Dutch, Cypriot and Austrian trade balances. German ZEW index, wholesale prices and index of leading economic indicators. French business sentiment and Italian industrial production. Portuguese and Finnish current accounts.

U.K. and Switzerland: British CPI, RPI, PPI, DCLG house price index, wages, unemployment, employment, retail sales, RICs house price index, and industrial trends survey of the CBI. Swiss producer prices and unemployment.

Nordic Europe: Norwegian, Swedish and Danish consumer prices. Norwegian and Danish PPI and trade data. Swedish unemployment.

Eastern Europe: Czech, Romanian and Polish consumer prices. Hungarian and Romanian industrial output. Czech trade and current account.

Australia and New Zealand: Australian employment, unemployment, business confidence and conditions, consumer confidence, and new home sales. New Zealand manufacturing PMI and food prices.

Turkey and South Africa: Turkish and South African GDP and current accounts. South African PPI, wholesale turnover, CPI and industrial production. Turkish unemployment.

Canada, Mexico, and Brazil: Canada’s monthly survey of manufacturing sales, orders and inventories. Canadian new home prices and existing home sales. Brazil and Mexican indices of leading economic indicators. Mexican industrial output and trade balance. Brazilian retail sales.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

 

Tags: Economic Data Calendar




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India’s Policy Interest Rate Kept at 6.0%

India’s Policy Interest Rate Kept at 6.0%

India’s Policy Interest Rate Kept at 6.0%

December 6, 2017

Although the decision not to change India’s monetary policy settings had been expected, the released statement embodies some mixed signals. There was a single dissenting vote to cut the main policy rate by 25 basis points to 5.75%. A previous such cut this year occurred in early August. On the other hand, note was made that inflation had risen further in October and, more importantly, that expected inflation has crept higher. “The Reserve Bank’s survey of households showed inflation expectations firming up in the latest round for both three months ahead and one year ahead horizons.” While price risks are deemed symmetrical, numerous upside risks are cited:

Moderation in inflation excluding food and fuel observed in Q1 of 2017-18 has, by and large, reversed. There is a risk that this upward trajectory may continue in the near-term. Second, the impact of HRA by the Central Government is expected to peak in December. The staggered impact of HRA increases by various state governments may push up housing inflation further in 2018, with attendant second order effects. Third, the recent rise in international crude oil prices may sustain, especially on account of the OPEC’s decision to maintain production cuts through next year. In such a scenario, any adverse supply shock due to geo-political developments could push up prices even further. On the whole, inflation is estimated in the range 4.3-4.7 per cent in Q3 and Q4 of this year, including the HRA effect of up to
35 basis points.

From January 2015 to August 2017, a cummulative 2 percentage point reduction of the central bank interest rate was implemented. Despite the dissenting vote in the last meeting of 2017, it seems more likely that the next rate change will be upward.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Reserve Bank of India




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Next Week

Next Week

Next Week

December 1, 2017

Central Bank Policy Reviews: Australia, Brazil, Canada, India, Poland, and Serbia.

Purchasing Managers Surveys: Private domestic, non-oil, or manufacturing PMIs for November to be released for South Africa, Singapore, Malaysia, Indonesia, Lebanon, Egypt, Saudi Arabia and the United Arab Emirates. Retail PMIs for Euroland, Germany, France and Italy. Construction PMIs due for Australia and Great Britain. Service sector and/or non-manufacturing PMIs will be reported for Australia, Japan, China, Italy, Ireland, France, Germany, Euroland, the U.K., India, the United States, Russia, Spain, and Brazil.

Scheduled U.S. Data Releases: Monthly jobs and unemployment report, the trade balance, U. Michigan/Reuters consumer sentiment index, the IBD/TIPP Optimism index, ADP’s estimate of private jobs growth, consumer credit, factory orders, quarterly productivity and unit labor costs, and weekly jobless insurance claims, consumer comfort, energy inventories, mortgage applications, and chain store sales.

Japanese Statistics: Real GDP, the current account, bank lending, international reserves, economy watchers index, labor cash earnings, bankruptcies, consumer confidence, index of leading economic indicators and the monetary base.

Selected Other Asian Data: Chinese reserves, foreign direct investment and trade balance. Indonesian, Filipino, and Thai consumer prices. Thai and Filipino producer prices. Malaysian trade, South Korean current account and Indonesian consumer confidence.

Euroland: Real GDP, retail sales, producer prices and the Sentix gauge of financial market sentiment.

Members of the Euro Area: German industrial production and orders, current account and trade balance. French industrial output, trade balance and current account. Spanish, Finnish and Irish industrial production. Spanish and Greek unemployment. Greek, Cypriot, and Dutch CPI. Greek and Cypriot GDP. Spain’s index of leading economic indicators. Greek trade and Austrian WPI.

U.K. and Switzerland: British industrial production, trade balance, construction output, Halifax house price index, same-store sales, Royal Institute of Chartered Surveyors’ house index, and monthly GDP. Swiss consumer prices and unemployment.

Eastern Europe: Romanian and Hungarian GDP. Czech and Hungarian industrial output. Hungarian retail sales and CPI. Czech trade.

Nordic Europe: Norwegian, Swedish and Danish industrial production. Norwegian current account and Icelandic GDP.

Australia and New Zealand: Australian retail sales, current account, GDP, corporate earnings, and new home sales. Quarterly New Zealand manufacturing activity.

Turkey and South Africa: Turkish CPI, PPI, retail sales and industrial output. South African GDP.

Canada, Brazil and Mexico: Canadian trade balance, building permits, housing starts, IVEY-PMI index, and quarterly productivity, unit labor costs and capacity usage. Brazilian industrial output, consumer prices and trade balance. Mexican CPI, PPI, and consumer confidence.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Economic Data Calendar




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November in Figures

November in Figures

November in Figures

November 30, 2017

The dollar fell mostly during November, constituting a change in direction from movements in October. Nonetheless, U.S. stocks recorded impressive gains just as they had the month before. Japanese share prices also climbed sharply in November, but many European stock markets declined. Investors became more confident that the Federal Reserve would hike interest rates in December and that a U.S. tax cut bill would be passed, if not before the Christmas recess, then early next year. The choice of Jay Powell to be Fed Chair evoked little market reaction, and neither geopolitical matters nor the ongoing Mueller investigation into Russian involvement in the 2016 U.S. election. West Texas Intermediate crude oil climbed at least 5% for a second straight month, but Comex gold hardly capitalized on the dollar’s softer tone in November.

10-Yr Yield 11/30/17 10/31/17 Chg vs -End-Oct
U.S. 2.41% 2.37% +4 Basis Points
Germany 0.36% 0.36% 0
Japan 0.03% 0.06% -3
U.K. 1.33% 1.33% 0
Canada 1.88% 1.95% -7
Switzerland -0.17% -0.12% -5
3-month rates 11/30/17 10/31/17 Chg vs End-Oct
U.S. 1.487% 1.38% +10 Basis Points
Euroland -0.33% -0.38% +5
Japan -0.01% -0.04% +3
U.K. 0.52% 0.43% +9
Swiss -0.75% -0.73% -2
FX 11/30/17 10/31/17 Pct Chg in $
EUR/USD 1.1905 1.1650 -2.1%
USD/JPY 112.56 113.70 -1.0%
USD/CHF 0.9836 0.9976 -1.4%
GBP/USD 1.3532 1.3285 -1.8%
AUD/USD 0.7565 0.7656 +1.2%
NZD/USD 0.6833 0.6844 +0.2%
USD/CAD 1.2896 1.2898 0.0%
USD/CNY 6.6091 6.6350 -0.4%
Equities 11/30/17 10/31/17 Chg vs End-Oct
S&P 500 2648 2575 +2.8%
Nasdaq 6874 6728 +2.2%
Djia 22272 23377 +3.8%
Dax  13024 13230 -1.6%
Nikkei 22725 22012 +3.2%
Ftse 7327 7493 -2.2%
Canada TSE 16067 16026 +0.3%
Swiss SMI 9319 9242 +0.8%
Commodities 11/30/17 10/31/17 Chg vs End-Oct
Oil, $ per barrel 57.34 54.38 +5.4%
Gold, $ per ounce 1275.12 1267.00 +0.6%

Copyright Larry Greenberg 2017.  All rights reserved.  No secondary distribution without express permission.

Tags: bonds, foreign exchange, gold, Oil, stocks




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