Tue, Dec 06, 2022 @ 23:27 GMT

Fed Harker said “no, not right now” for another rate cut

    Philadelphia Fed President Patrick Harker told CNBC “No. Not right now”, when asked if he sees a case for further rate cut. He explained, “the labor markets are strong, inflation is moving up slowly — but with the last CPI print, it was a good print,”

    On the current interest rate, he said: “We’re roughly where neutral is. It’s hard to know exactly where neutral is, but I think we’re roughly where neutral is right now. And I think we should stay here for a while and see how things play out.”

    German Merkel: Pressure from outside is not the right instrument to convince UK parliament

      German Chancellor Angela Merkel said “clear, far-reaching proposals have been made that take into account the concerns of Britain and that seek to find answers to them.” She wanted an orderly Brexit but the UK parliament now had to decide. But she noted that “pressure from outside is not the right instrument to convince people”. And, “we expressly support this step. But this is not about pressure, it is about partnership where one tries to protect one’s own interests and others’ interests to find a solution”.

      Yesterday, European Commission President Jean-Claude Juncker warned that “there will be no third chance, there will be no further interpretations of the interpretations, no further assurances of the re-assurances – if the meaningful vote tomorrow fails.” “The choice is clear: it is this deal, or Brexit may not happen at all. Let’s bring the UK’s withdrawal to an orderly end. We owe it to history,” Juncker added.

      UK retail sales dropped -0.2% mom, -1.3% yoy in Sep

        UK retail sales dropped -0.2% mom, -1.3% yoy in September, below expectation of 0.7% mom, -0.4% yoy. Ex-fuel sales dropped -0.6% mom, -2.6% yoy, below expectation of 0.2% mom, -1.7% yoy.

        ONS also noted: “Despite relaxation of COVID-19 restrictions in summer 2021, in-store retail sales remain subdued; the proportion of retail sales online rose to 28.1% in September 2021 from 27.9% in August, substantially higher than the 19.7% in February 2020 before the pandemic.”

        Full release here.

        Eurozone Sentix investor confidence rose to -30.9, concerns of catastrophic gas shortage fading

          Eurozone Sentix Investor Confidence rose from -38.3 to -30.9 in November, above expectation of -35. Current situation index rose from -35.5 to -29.5. Expectations index rose from -41.0 to -32.3, highest since June this year.

          Sentix said: “At the beginning of November, the sentix economic indices in Euroland surprise on the positive side. The overall index rises by 7.4 points to -30.9, which is still not a trend reversal signal. But the rise in situation and expectation values shows how sensitively investors react in their economic expectations to signals from the energy market.

          “For this is the cause of the hopeful changes. October showed higher temperatures than usual and this means that gas storage facilities in Germany, for example, are full to the brim, more than expected for November. Spot market gas prices collapsed in response. Concerns about a catastrophic gas shortage are fading.”

          Full released here.

          Asian business sentiment swung from decade low to 18-month high

            Thomson Reuters/INSEAD Asian Business Sentiment jumped to 71 in Q4. That was a large swing from Q3’s 58, which was close a decade low, to the highest since June last year. The change was also a noticeable shift from neutral to optimistic even though majority of firms are not yet confident enough to plan hiring.

            Antonio Fatas, economics professor at INSEAD, said, “conditions, expectations and some of the uncertainty has improved over the last quarter. But I don’t see this uncertainty disappearing, I think some of these tensions are going to stay with us maybe for years or decades.”

            Full report here.

            Canada GDP contracted -0.3% mom in Apr, first decline in a year

              Canada GDP contracted -0.3% mom in April, better than expectation of -0.80%. That’s the first contraction after 11 consecutive monthly growth. Total economic activity remains about -1% below its pre-pandemic level in February 2020.

              12 of 20 industrial sectors were down. Good producing industries’ 0.5% gain were more than offset by -0.6% mom contraction in services-producing industries.

              Preliminary information indicates a further -0.3% mom contraction in real GDP in May.

              Full release here.

              Eurozone industrial production dropped -0.2% mom in Sep, EU down -0.5% mom

                Eurozone industrial production dropped -0.2% mom in September, better than expectation of -0.5% mom. Production of capital goods fell by -0.7%, intermediate goods by -0.2%, while production of energy remained stable, durable consumer goods rose by 0.5% and non-durable consumer goods by 1.0%.

                EU industrial production dropped -0.5% mom. Among Member States for which data are available, the largest monthly decreases were registered in Denmark (-5.0%), Czechia (-3.2%) and Austria (-3.0%). The highest increases were observed in Estonia (+5.3%), Lithuania (+4.3%) and Belgium (+3.7%).

                Full release here.

                France PMI composite dropped to 54.7, growth profile akin to a K

                  France PMI Manufacturing dropped to 53.3 in October, down from September’s 55.0, below expectation of 54.3. That’s also a 9-month low. PMI Services rose to 56.6, up from 56.2, above expectation of 55.3. PMI Composite dropped slightly to 54.7, down from 55.3, a 6-month low.

                  Joe Hayes, Senior Economist at IHS Markit said: “Responsibility for France’s economic recovery was placed firmly on the shoulders of the service sector in October, as latest PMI data showed manufacturing output falling for the first time since January. The overall rate of expansion slowed to a six-month low as the supply-side issues hurting manufacturers the most offset a faster expansion in services activity. Of the medley of letters that an economic recovery can look like, France’s growth profile is currently akin to a “K”.

                  Full release here.

                  UK NIESR: Energy price guarantees to drive GDP growth higher in Q4

                    NIESR said the -0.3% contraction in UK GDP in August “possibly signalling the beginning of an economic recession”. Given that September PMI pointed to further decrease in the manufacturing sector, it’s likely to continue to drag on the economy in Q3.

                    However, it expects “the energy price guarantees for households and firms announced in September’s fiscal event to drive GDP growth higher in the fourth quarter. The extent to which the measures in the mini-budget will counter the dampening effects of plummeting confidence and increased interest rates will become clearer over the coming months.”

                    Full release here.

                    Japan posted first annual export growth since 2018

                      In non seasonally adjusted terms, Japan’s exports rose 2.0% yoy in December to JPY 6.71T, slightly below expectation of 2.4% yoy rise. But that’s still the first annual growth since November 2018. Imports dropped -11.6% yoy to JPY 5.96T, above expectation of -14.0% yoy. Trade came in at JPY 751B, small than expectation of JPY 943B.

                      In seasonally adjusted terms, exports dropped -0.1% mom to JPY 5.98T. Imports rose 1.3% mom to 5.50T. Trade surplus narrowed to JPY 477B, below expectation off JPY 760B.

                      Full release here.

                      DOW finally made new record high, targets 32932 next

                        DOW finally caught up with other major US indices and closed at record high overnight, up 0.76% at 31385.76. The solid support from 55 day EMA affirmed near term bullishness too. Further rise is now expected as long as 29856.30 support holds. Next target is 61.8% projection of 18213.65 to 29199.35 from 26143.77 at 32932.93.

                        NASDAQ has been even stronger, considering that it’s kept comfortably above rising 55 day EMA all the way in the past few months. It’s on track to 61.8% projection of 6631.42 to 12074.06 from 10822.57 at 14186.12.

                        US initial jobless claims dropped to 340k, continuing claims dropped to 2.75m

                          US initial jobless claims dropped -14k to 340k in the week ending August 28, better than expectation of 351k. That’s the lowest level since march 14, 2020. Four-week moving average of initial claims dropped -12k to 355k, lowest since March 2020 too.

                          Continuing claims dropped -160k to 2748k in the week ending August 21, lowest since March 14, 2020. Four-week moving average of continuing claims dropped -58k to 2855k, lowest since March 21, 2020.

                          Full release here.

                          Bundesbank: Germany inflation could rise again in September

                            Bundesbank said in its monthly report, “the German economy is likely to have stagnated in spring 2022.” High inflation is having a negative impact on the purchasing power of private households. Also, poor consumer mood due to the uncertainty about further economic development was noticeable in the sharp fall in sales in retail and vehicle trade

                            On prices, Bundesbank continues to expect high inflation rates in the coming months. Inflation could even rise again in September because the temporary relief measures will no longer apply. The further development of the energy commodity markets is very uncertain, especially with regard to natural gas deliveries from Russia. The risks for the price development are pointing upwards.

                            Full release here.

                            UK Fox: Changes in EU’s Brexit position due to economic slowdown

                              UK Trade Minister Liam Fox said today that EU is now more afraid of no-deal Brexit due to economic slowdown , including Germany and France. Fox said “there have been some changes in the positions in recent times, dictated by reality”.

                              And, “We’ve seen, for example, the German economy weakening, we’ve seen the French economy weakening, and I think this (EU) view that ‘we can simply weather out any disturbance that would occur from a no deal’, I think there’s much less appetite for that.”

                              Canada retail sales dropped for the first time in three months

                                Canada retail sales dropped for the first time in three months, by -0.1% mom to CAD 51.6B in September. Though, that was better than expectation of -0.3% mom fall. Excluding autos, retail sales rose 0.2% mom, above expectation of -0.1% mom.

                                Retail sales were down in Alberta (-1.6%) and New Brunswick (-3.7%). In Quebec, retail sales increased 0.7%. In the census metropolitan area (CMA) of Montréal, sales were up 0.6%. Retail sales in Ontario (+0.3%) continued their upward trend, increasing for the seventh time in eight months. In the CMA of Toronto, retail sales were up 1.5%.

                                Full release here.

                                China Caixin PMI services rose to 55.5, composite dropped to 54.0

                                  China Caixin PMI Services rose from 54.5 to 55.5 in July, above expectation of 54.0. That’s the highest level since April 2021. PMI Composite dropped from 55.3 to 54.0.

                                  Wang Zhe, Senior Economist at Caixin Insight Group said: “In general, the eased Covid situation and restrictions facilitated a continuous recovery in the economy. The services sector, which had been previously hit harder by the outbreaks than manufacturing, showed stronger improvement. Supply and demand continued to improve with supply stronger than demand. The labor market shrank greatly, adding to employment pressures. Business costs steadily climbed while prices charged remained stable, posing challenges for company profits. The market held on to positive sentiment, even with concerns about the outlook for Covid and the economy.”

                                  Full release here.

                                  Fed Clarida: Baseline outlook favorable but economy confronts some evident risks

                                    Fed Vice Chairman Richard Clarida reiterated that looking ahead, “monetary policy is not on a preset course”. FOMC will “proceed on a meeting-by-meeting basis to assess the economic outlook as well as the risks to the outlook.” Also, Fed will “act as appropriate to sustain growth and achieve dual mandate.

                                    Clarida also repeated that the economy is “in a good place” and the “baseline outlook is favorable”. But the economy “confronts some evident risks”. In particular, he noted, ” Business fixed investment has slowed notably since last year, exports are contracting on a year-over-year basis, and indicators of manufacturing activity are weakening. Global growth estimates continue to be marked down, and global disinflationary pressures cloud the outlook for U.S. inflation.”

                                    Clarida’s full speech here.

                                    New Zealand retail sales rose 2.5% qoq in Q1

                                      New Zealand retail sales rose 2.5% qoq in Q1, much better than expectation of -1.8% qoq. 10 of the 16 regions showed higher sales values. Ex-auto sales rose 3.2% qoq, also well above expectation of -1.0% qoq.

                                      Electrical and electronic goods had the largest increase, up 8.4 percent followed by recreational goods, up 16 percent in the March 2021 quarter.

                                      “Higher spending in the electrical industry coincides with falling prices for computers and phones during the first quarter of 2021,” retail business manager Sue Chapman said.

                                      Full release here.

                                      France household consumption dropped -8.3% mom in Apr

                                        France household consumption expenditure dropped -8.3% mom in April. The decline was mainly due to manufactured goods purchases (–18.9%), during the third lockdown. Energy expenditure dropped slightly by -0.6%. Food consumption dropped -0.2%. Spending was -9.5% below its average level in Q4, 2019.

                                        Also released, CPI came in at 0.3% mom, 1.8% yoy in May, matched expectations. GDP dropped slightly by -0.1% qoq in Q1. It stood -4.7% below prepandemic level in Q4 2019.

                                        ECB Makhlouf: Premature to be talking about end-point for policy rates

                                          ECB Governing Council member Gabriel Makhlouf said, “To continue on our path to bring inflation back to our 2% target, I see a 50 basis-point increase in interest rates as the minimum needed at our December meeting.”

                                          “We have to be open to policy rates moving into restrictive territory for a period,” the Irish central-bank chief said. “It is premature to be talking about the end-point for policy rates amid the prevailing levels of uncertainty.”

                                          “The justification for the expansion of the balance sheet – too low inflation and the risk of deflation – has ended, and it is time to look at reducing its size,” he said.