Turning the Page – Currency Thoughts
Turning the Page
September 3, 2024
The start of any month offers the possibility of a new chapter, but that opportunity applies especially to September. It’s the start of a new school year and vacationers are returning to work. Days are discernibly shorter and cooler in the Northern hemisphere. The prevailing mood in financial market chatter as this particular September kicks off is one of trepidation. August felt too good to be true, and all summer markets have been anticipating this month for clarity in how forcefully Fed officials will be responding to evidence of a turn in the labor market.
Past Septembers have seen critical inflection points. A peak in U.S. share prices 95 years ago tomorrow foreshadowed the Great Depression, and that day’s high was not revisited for another quarter of century. Years later, a speculative maelstrom against sterling bounced the British currency out of the forerunner of the eurozone on September 16, 1992, sealing that economy’s trajectory on a different path from the rest of Europe.
In observance of Labor Day, the United States was not open for business on this year’s first business day of September, and early signs suggest that the U.S. stock market will be kicking off the month on a negative note. Most Asian and European equities have faltered, and U.S. stock futures are currently about a half percent in the red. A dollar uptick of 0.2% on a weighted basis suggests an aversion to risk. Euroland’s August purchasing managers survey of manufacturers out yesterday offered a combination of ongoing recession and a disturbing renewed flareup of inflationary pressure. The U.S. report card for manufacturing in August will be out shortly, and construction spending and the RCM/TIPP optimism index are also on today’s U.S. data menu. The big prize on Friday is the month’s labor market situation compiled by the Labor Dept, and the all-important Harris-Trump debate looms is a mere week away.
In other overnight market activity, ten-year sovereign debt yields rose two basis points in France and Italy and by one basis point in the United States, Japan and Spain, but fell a basis point in Great Britain and stayed flat in Germany. The prices of gold and bitcoin are marginally softer, and WTI oil has experienced a more meaningful drop of 1.5%.
From price data reported around the world, investors learned of
- A 5-month low in Swiss consumer price inflation of 1.1% in August, which was a mere 0.1 percentage point above March’s 80-month low and down from 3.5% in August 2022.
- South Korean CPI inflation slowed to a 41-month low of 2.0% last month despite the largest month-on-month increase in consumer prices since February.
- Turkey experienced further disinflation but from a very elevated level. CPI inflation had crested at 75.5% in May and was at 52.0% last month, while producer price inflation has receded from 57.7% in May to 35.8%.
- Romanian producer price inflation almost doubled in July to a 13-month high of 2.1% from 1.1% in June and a record low of -8.0% last March.
- In Georgia the country, CPI inflation slowed to a 5-month low of 1.0% in August, having crested at 13.9% in January 2022.
August non-oil purchasing manager indices rose in August to a 45-month high of 50.4 in Egypt and a 2-month high of 54.8 in Saudi Arabia.
South African GDP grew 0.4% last quarter but still registered a meager year-on-year increase of 0.3%, down from 1.8% in the previous four-quarter period ending in mid-2023.
Swiss real gross domestic product went up 0.7% on quarter and 1.8% on year in 2Q 2024. Each of those growth rates represented the most since the second quarter of 2022.
GDP in Hungary was reconfirmed at earlier estimates, a quarterly 0.2% dip but the biggest year-on-year advance (1.5%) in seven quarters.
Latvian industrial production was 1.4% greater than a year earlier in July, whereas Georgian industrial production between the second quarters of 2023 and 2024 jumped by 13.6%.
Australia’s current account deficit of A$ 10.7 billion last quarter was the largest shortfall in two years an equivalent to about 1.2% of GDP. Iceland experienced a third consecutive quarterly current account deficit whose size (ISK 30.5) contrasted with a year-earlier surplus of ISK 6.1 billion in 2Q 2023.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Swiss GDP and CPI, Turkish CPI and PPI inflation
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