Mid-Friday Briefing – Currency Thoughts
Mid-Friday Briefing
December 13, 2024
Compared to Thursday closing levels, ten-year sovereign debt yields have risen five basis points in the United States, Germany, Spain and U.K., four bps in Italy, and six bps in France. In spite of higher November CPI, PPI and import price inflation, the Federal Reserve is widely expected to cut its interest rate next Wednesday by 25 basis points.
The dollar is stronger, with gains of 0.7% against the yen 0.3% versus sterling, 0.2% against the euro and 0.1% relative to the Swiss franc, Canadian dollar, Aussie dollar and New Zealand dollar. Bitcoin is above $100k and 0.9% higher on the dollar. The cost of oil is up 1.5%, while that of gold has fallen 1.6%.
Share prices lost 2.1% in Hong Kong, 2.0% in China, and 1.0% in Japan but show little change in the U.S. or European major stock markets today.
U.S. import price inflation more than doubled to 1.3% in November as fuel prices jumped 1.0% on month compared to a 6.3% monthly drop in November of 2023.
Japanese industrial production in October was revised slightly downward but still posted a big 2.8% monthly advance and was also 1.4% higher than a year earlier. Capacity utilization increased 2.6% and recorded its first year-on-year advance in well over a year.
Euroland industrial production was unchanged on month in October and 1.2% lower than a year earlier.
British industrial production fell 0.6% on month and 0.7% on year in October. Construction output dropped 0.4% on month and 0.7% on year, and the U.K. trade deficit was wider than both the September and October 2023 imbalances. Consumer confidence rose to a 4-month high, however.
New Zealand’s manufacturing purchasing managers index printed at a 4-month low of 45.5 in November and was below the 50 level that separates improvement from contraction for a 21st straight month.
Consumer price inflation in France of 1.3% and Spain of 2.4% during November were left unrevised from preliminary estimates.
German wholesale price inflation of minus 0.6% last month was its least negative in four months. The seasonally adjusted German trade surplus narrowed to a 23-month low in October.
Consumer price inflation last month of 4.7% in Poland was at a 3-month low and down from 18.4% in February 2023. CPI inflation in Finland dipped to a 2-month low of 1.0%, well below the 9.1% peak at end-2022, and Slovakian CPI inflation rose to a 9-month high of 3.2%.
New bank lending in China last month of CNY 580 billion was the smallest November amount in a dozen years. M2 money expansion slowed to a year-on-year 7.1% pace.
Peru’s central bank interest rate was left unchanged at the last 2024 monetary policy review. It’s been at 5.0% since May after decreases of 100 basis points during 2023 and another 175 bps earlier this year. CPI inflation in Peru accelerated from 1.8% in September to 5-month high of 2.27% last month.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Reserve Bank of Peru, Chinese money growth and bank lendign, industrial production in the U;K. and Euroland, U.S. import prices
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