Wed, Dec 07, 2022 @ 00:16 GMT

Canada CPI ticked up to 6.8% yoy in Apr, driven by food and shelter prices

    Canada CPI ticked up further to 6.8% yoy in April, up from March’s 6.7% yoy, above expectation of 6.7% yoy. CPI ex-gasoline accelerated to 5.8%, up from 5.5% yoy, fastest since the series was introduced in 1999. Statics Canada added that the year-over-year increase in April was largely driven by food and shelter prices. Gas prices increased at a slower pace.

    Looking at the preferred measures of core inflation by BoC, CPI common rose from 3.0% yoy to 3.2% yoy, above expectation of 2.9% yoy. CPI median rose from 4.0% yoy to 4.4% yoy, above expectation of 3.9% yoy. CPI trimmed rose from 4.8% yoy to 5.1% yoy, above expectation of 4.7% yoy.

    Full release here.

    Australia NAB business confidence rose to -5, resilience and well positioned to rebound

      Australia NAB business confidence rose slightly from -7 to -5 in August. Business conditions improved from 10 to 14. Looking at some details, trading condition rose from 12 to 19. Profitability condition rose from 5 to 15. Employment condition, however, dropped from 11 to 9.

      NAB said, “while the sustained lockdowns now in place will cause a large hit to activity in the quarter, the resilience seen in the August survey results suggest that the supports in place, and lingering momentum from earlier in the year, are continuing to support the economy”.

      “There are also signs that progress on the vaccine rollout and growing certainty that lockdowns will end in coming months are providing a reason for optimism. The economy remains well positioned to rebound once restrictions are eased.”

      Full release here.

      UK Hammond: Extension to Brexit transition has to be proportional

        UK Chancellor of Exchequer Philip Hammond warned again yesterday that it the Brexit deal is not approved by Parliament, “we will have a political chaotic situation”. And, “we don’t know what the outcome of that will be”.

        On extension to the transition period, Hammond emphasized that “it would have to be proportional”. And, ” it certainly wouldn’t be more than that, but it would depend on what we were getting in return.” He added “When we look at the economy and the operation of the economy, getting a smooth exit from the European Union, doing this in an orderly fashion, is worth tens of billions of pounds to our economy.”

        Germany PMI manufacturing finalized at 58.4 in Feb, underlying demand strong

          Germany PMI Manufacturing was finalized at 58.4 in February, down from January’s 59.8. Markit said there were sharp rise in backlogs as growth in the new orders outstripped output. Factory cost inflation slipped further from recent highs. Incidence of supply delays was lowest since November 2020.

          Phil Smith, Associate Economics Director at IHS Markit, said:

          “Underlying demand for German manufactured goods was strong in February, with new order growth accelerating and the survey showing rising sales both domestically and internationally.

          “Production continued to rise, but staff absences linked to the Omicron wave of the pandemic were a constraint on output and added to already stretched capacity, thereby contributing to a sharp rise in backlogs of work. However, with COVID cases in the country looking like they might have already peaked, this particular headwind will hopefully be only temporary. Furthermore, the pace of factory job creation remained rapid as manufacturers looked to address capacity shortfalls.

          “Supply constraints showed further tentative signs of easing in February, and one of the positives from this was a fall in the rate of input cost inflation to an 11-month low. “When the survey was conducted, firms were hopeful of further progress in the supply situation and were highly optimistic about the outlook. With the escalation of the situation in Ukraine since February’s survey, and the surge in oil and gas prices that’s come with it, downside risks to the sector’s performance in 2022 have increased.”

          Full release here.

          US industrial production rose 0.6% vs expectation of 0.2%

            US industrial production rose 0.6% mom in August, better than expectation of 0.2% mom. Capacity utilization rose to 77.9%, above expectation of 77.6%. Looking at some details, manufacturing output rose 0.5% with production rose for most major categories within durable manufacturing. The largest gains were recorded by machinery, primary metals, and nonmetallic mineral products; the only sizable decline was recorded by motor vehicles and parts. Mining output rose 1.4% while utilities output rose 0.6%.

            Full release here.


            Trump unsure if he regrets on Fed Powell

              Trump repeated his attack on Fed and its Chair Jerome Powell again yesterday. He told WSJ that “I’m very unhappy with the Fed because Obama had zero interest rates”. And, referring to Powell, Trump added, “every time we do something great, he raises the interest rates”, and Powell “almost looks like he’s happy raising interest rates.”

              Asked if he regrets nominating Powell, Trump said it’s “too early to tell, but maybe”. Further, when asked on what circumstances would lead him to remove Powell, Trump said “I don’t know”. That’s already a shift in stance from “I’m not going to fire him” on October 11.

              Fed George not inclined to dismiss inflation signals

                Kansas City Fed President Esther George said she’s “not inclined to dismiss today’s pricing signals or to be overly reliant on historical relationships and dynamics in judging the outlook for inflation.” But she didn’t explicitly indicated whether she’s ready to adjust monetary policy for now.

                “The structure of the economy changes over time, and it will be important to adapt to new circumstances rather than adhere to a rigid formulation of policy reactions,” she said. “With a tremendous amount of fiscal stimulus flowing through the economy, the landscape could unfold quite differently than the one that shaped the thinking”.

                Australia AiG services rose to 47.6 in Oct, third month in contraction

                  Australia AiG Performance of Services rose 1.9 pts to 47.6 in October, marking a third month in contraction. Sales rose 13.8 to 55.2. Employment rose 4.8 to 56.8. New orders dropped -1.0 to 38.8. supplier deliveries dropped -7.5 to 39.5. Finished stocks dropped -13.7 to 39.8. Capacity utilization dropped -1.7 to 74.5. Input prices rose 9.1 to 73.6. Selling prices rose 7.8 to 61.7. Average wages rose 9.1 to 68.3.

                  Ai Group Chief Executive, Innes Willox, said: “The Australian services sector reported mixed fortunes in October… Across the services sector, sales and employment were higher in October while new orders were discouragingly low. A more robust recovery was inhibited by lingering activity restrictions, barriers to interstate movement and the same disruptions to the supply of inputs that are being felt in other parts of the economy… Services companies reported further strong rises in input prices and wages with selling prices also rising although not by enough to prevent additional pressure on margins.”

                  Full release here.

                  Into US session: Dollar refusing to give up despite selloff, stocks recovering

                    The forex markets are rather mixed today. Dollar extended yesterday’s selloff, on free falling treasury yields and after St. Louis Fed James Bullard became the first policymaker calling for a rate cut. But the greenback is not totally giving up yet. EUR/USD is struggling around 1.1263 resistance, AUD/USD around 0.6988 resistance and USD/CAD around 1.3429 support. There is no follow through selling in Dollar yet.

                    Australian Dollar is currently joint strongest with Canadian. RBA cut interest rate to 1.25% and Governor Philip Lowe deliberately noted that more rate cuts are on the table. But Aussie just shrugged them off. Euro is next strongest but upside is capped by mixed economic data. Eurozone CPI slowed more than expected to 1.2% yoy in May but unemployment rate dropped to record low at 7.6% in April. Sterling is also firm even though UK PMI construction dropped back into contraction region. Swiss Franc and Yen are the weakest ones for today, as European indices are trading higher together DOW futures.

                    In Europe, currently:

                    • FTSE is up 0.25%.
                    • DAX is up 1.14%.
                    • CAC is up 0.28%.
                    • German 10-year yield is down -0.0121 at -0.211.

                    Earlier in Asia:

                    • Nikkei dropped -0.01%.
                    • Hong Kong HSI dropped -0.49%.
                    • China Shanghai SSE dropped -0.96%.
                    • Singapore Strait Times rose 0.61%.
                    • Japan 10-year JGB yield dropped -0.074 to -0.10.

                    Australia trimmed mean and weighted median CPI rose to highest in over 5 yrs

                      Australia CPI rose 0.8% qoq in Q3, matched expectations. Over the 12-month period, headline CPI slowed from 3.8% yoy to 3.0% yoy. Trimmed mean CPI jumped from 1.6% yoy to 2.1% yoy. Weighted median CPI rose from 1.6% yoy to 2.1% yoy too. Both trimmed mean and weighted mean CPI readings were highest in over five years, and the first annual movements above 2% since September 2015 quarter.

                      Head of Prices Statistics at the ABS, Michelle Marquardt said the most significant price rises in the September quarter were new dwellings (+3.3 per cent) and automotive fuel (+7.1 per cent).

                      Full release here.

                      Canada retail sales up 0.9% mom in Apr, to rise 1.6% mom in May

                        Canada retail sales rose 0.9% mom to CAD 60.7B in April, slightly above expectation of 0.8% mom. Sales were up in 6 of 11 subsectors. Excluding gasoline stations and motor vehicle and parts dealers, sales rose 1.0% mom.

                        Preliminary data suggests that sales rose 1.6% mom in May.

                        Full release here.

                        Japan and China agreed to improve tie after first high-level meeting in eight years

                          The outcome of the first high-level economic talks in eight years between China and Japan appeared to be positive. Japanese Foreign Affairs Minister Taro Kono and Chinese State Councillor Wang Yi met in Tokyo on Sunday. Both agreed to work on strengthening the relationship with more high level visits ahead.

                          Wang said that “I hope we can begin at a fresh starting point and discuss a new future, while promoting a new cooperative relationship. I want to have in-depth discussions on economic policies, cooperation on the belt and road initiative and further integration of East Asian countries.”

                          Kono also said that “I hope to hold active discussions about regional and global economic issues. I would also like to take this opportunity to further strengthen economic relations between Japan and China.”

                          Also more high-level visits were agreed, with Chinese Premier Li Keqiang go to Japan for a Japan-China-South Korea summit. And then Japan Prime Minister Shinzo Abe will visit China while Chinese President Xi Jinping will also visit Japan.

                          Separately, Abe will meet with US President Donald Trump at the latter’s Mar-a Lago resort for two days this week starting Tuesday.

                          US oil inventories rose 3.3m barrels, WTI staying in sideway consolidation

                            US commercial crude oil inventories rose 3.3m barrels in the week ending October 29, above expectation of 1.9m. At 434.1m barrels, oil inventories are about 6% below the five year average for this time of year. Gasoline inventories dropped -1.5m barrels. Distillate rose 2.2m barrels. Propane/propylene rose 0.4m barrels. Commercial petroleum inventories rose 0.6m barrels.

                            WTI crude oil is staying in consolidation from 85.92 for the moment. Such consolidation should be relatively brief as long as 81.04 support holds. Break of 85.92 will resume larger up trend to 61.8% projection of 33.50 to 77.16 from 61.90 at 88.88. However, break of 81.04 will bring deeper correction to 55 day EMA (now at 77.12) before up trend resumption.

                            Japan PMIs: Plenty of promise, fears allayed for now

                              Japan PMI Manufacturing rose 0.1 to 49.5 in August. PMI Services rose 1.6 to 53.4. PMI Composite rose 1.1 to 51.7.

                              Joe Hayes, Economists at IHS Markit noted: “Preliminary August PMI data give plenty of promise that the solid growth trend seen in the GDP outturns so far this year could indeed stretch into the third quarter, providing a timely boost before the fourth quarter, which is likely to be adversely impacted by the consequences of sales tax hike”.

                              “The driving force behind this remains the service sector, which is lifted by resilient demand within the domestic economy. Flash data showed services activity growing at the fastest rate in almost two years in August, allaying fears, at least for the time being, that strong external headwinds being felt within manufacturing could spread to other parts of the economy.”

                              Full release here.

                              US-China trade talks “have not broken down” but significant differences on issues of principle remain

                                Last week’s US-China negotiations ended with practically no progress, but just confirmation that the tariff war will drag on. New round of tariffs already took effect on Friday and paperwork for tariffs on USD 325B in Chinese goods has started. For now, no new round of talks is scheduled. China’s retaliations are awaited and could be announced any time soon.

                                Chines Vice Premier Liu He told reporters on Friday that the “negotiations have not broken down”. He also tried to talked down the situation and said mall setbacks are normal and inevitable during the negotiations of both countries. Looking forward, we are still cautiously optimistic” . Yet, he added that “right now, both sides have reached mutual understanding in many things, but frankly speaking, there are also differences.”

                                Liu emphasized “differences are significant issues of principle,” and “we absolutely cannot make concessions on such issues of principle.” One of the issues is over the current tariffs. Liu told Phoenix television in Hong Kong that if both sides wanted to reach an agreement, then all tariffs must be eliminated. Also, both sides have different opinions on the volume of additional purchase of US goods from China. As noted by a commentary by state news agency Xinhua, any purchases should be “in line with reality”. The biggest issue, though, is likely on the text regarding law changes regarding core issues like IP theft, which China sees as intrusion of sovereignty. Liu said that “every nation has its dignity, so the text ought to be balanced,”

                                Trump continued to sound hard line on China with his tweets and said China was “beaten so badly” in recent negotiations and they may as well “wait around for next election” to see if they can “get lucky and have a Democratic win”. But Trump also said “the only problem is that they know I am going to win… and the deal will become far worse for them if it has to be negotiated in my second term. Would be wise for them to act now, but love collecting BIG TARIFFS!”. Trump typically didn’t elaborate the logic link between China knowing he will win the second term yet, they’re waiting for next election. That’s no point in dragging on if a Trump win is certain.

                                Bolton: Europeans Companies could face US sanctions

                                  Trump’s national security advisor John Bolton talked bout the decision to withdraw from the Iran nuclear pact on Sunday. He indicated that it’s “possible” for the US to impose sanctions on European companies that continue to do business with Iran. And, he noted that “it depends on the conduct of other governments”.

                                  Bolton also added, “the president said in his statement on Tuesday that countries that countries that continue to deal with Iran could face U.S. sanctions. Europeans are going to face the effective U.S. sanctions, already are really, because much of what they would like to sell to Iran involves U.S. technology, for which the licenses will not be available.” But he said he’s “hopeful in the days and weeks ahead” there would be a deal that really works.

                                  Japan PMI manufacturing finalized at 48.8, still portraying a struggling industry

                                    Japan PMI Manufacturing was finalized at 48.8 in January, a slight increase from December’s 48.4. But contracted has continued since last May. Output and new orders recorded further declines. Export demand dipped, but downturn shows signs of easing. On the positive side, business confidence hits highest level since August 2018.

                                    Commenting on the latest survey results, Joe Hayes, Economist at IHS Markit, said:

                                    “Manufacturing PMI data for Japan are still portraying a struggling industry, causing firms to cut back production for another month due to subdued demand and global uncertainties.

                                    “Scratching beneath the surface and we find that the capital goods sector was a particular straggler, with data here showing sharp and accelerated reductions in production and new orders. Falling demand for capital goods does not bode well for the global economic outlook, nor for Japanese exports.

                                    “That said, business optimism showed real signs of promise for 2020, with new product launches and expectations of greater global demand helping to lift sentiment to a near one-and-a-half year high. Manufacturers of intermediate goods, which include electronic components, reported a particularly sharp rise in optimism, serving as an early signal of the positive impact receding global trade frictions will have on the industrial economy.”

                                    Full release here.

                                    Eurozone PPI at 5.2% mom, 30.6% yoy in Jan

                                      Eurozone PPI rose 5.2% mom, 30.6% yoy in January, above expectation of 3.0% mom, 26.9% yoy. For the month, industrial producer prices increased by 11.6% in the energy sector, by 2.7% for intermediate goods, by 2.2% for durable consumer goods, by 1.6% for non-durable consumer goods and by 1.5% for capital goods. Prices in total industry excluding energy increased by 2.2%.

                                      EU PPI rose 4.9% mom, 30.3% yoy. The highest monthly increases in industrial producer prices were recorded in Romania (+12.0%), Belgium (+10.2%) and Slovakia (+8.7%). Decreases were observed in Ireland (-11.4%), Sweden (-0.7%), Luxembourg (-0.3%), and Finland (-0.2%).

                                      Full release here.


                                      WHO Tedros warned coronavirus is public enemy number one

                                        WHO Director-General Tedros Adhanom Ghebreyesus warned yesterday that China’s Wuhan coronavirus, or COVID-19, is the “public enemy number one”. And, “viruses can have more powerful consequences than any terrorist action.” The first vaccine is estimated to be 18 month from now. AT this point, Tedros said there have been 92 cases of human-to-human transmission in 12 countries outside China. But the WHO had not seen sustained local transmission yet, except in specific cases like the Diamond Princess liner.

                                        Some experts estimated that each infected person would transmit the virus to about 2.5 other people. That would result in an attack rate of 60-80%. Prof Gabriel Leung, the chair of public health medicine at Hong Kong University, said in London that “60% of the world’s population is an awfully big number.” He added: “We need to get a clear view of the contagion and plug the holes in our understanding of the disease to inform public health decisions that affect hundreds of millions of lives.”

                                        According to China’s National Health Commission, on February 18, Wuhan coronavirus cases added 1749 to 74185. Death tolls added 136 to 2004.