Daily Review – Tuesday 25-Oct-2016

Daily Review – Tuesday 25-Oct-2016

US – Flash Manufacturing PMI

After 3 months of declining numbers, the IHS Markit Flash Manufacturing PMI showed a strong comeback at 53.2 for October. The highest reading in the last 12 months.

US domestic economic conditions are the main driver for this growth with manufacturers reporting that they’ve increased production and purchasing activities hoping for a post-election increase in demand.

 

US – FOMC Members Dudley and Bullard Speak

FED FOMC members Dudley and Bullard both spoke on two separate occasions.

New York FED William Dudley emphasized that regulators need a more transparent view into the US treasury market, but didn’t mention anything regarding a possible rate hike.

St. Louis FED James Bullard was more straight forward with his words and said the FED only needs to nudge up interest rates even though it is very close to its targets of full employment and stable inflation at an annual rate of 2%.

Markets didn’t really move on both members’ comments.

 

Canada – Wholesale Sales M/M

Canadian wholesale sales increased 0.8% in August, a five month consecutive gain.

Five of the seven sub-sectors, representing 80% of total wholesale sales, reported increases.

The miscellaneous sub-sector and machinery, equipment and supplies sub-sector contributed the most to the rise.

 

UK – MPC Member Shafik Speaks

BOE member Shafik, who is responsible for financial market, said the barriers for cooperation between countries’ financial regulators remain high, despite the shared risk from rapid credit growth.

Research from the BOE showed that even when domestic lending growth was moderate, rapid lending growth abroad increased the risk of financial instability through cross-border lending, inflated asset prices and contagion from foreign banking crises.

 

UK – CBI Industrial Order Expectations

Industrial orders in the UK fell sharply to -17 in October from -5 in September, in contrast to economists’ forecasts for a small uptick of -2.

Rain Newton-Smith, Chief Economist at CBI said:

“Manufacturers are optimistic about export prospects and export orders are growing, following the fall in British pound. However, the weaker pound is also feeding through to costs, which are rising swiftly and may well spill over into higher consumer prices in the months ahead”

 

EU – German Flash Manufacturing PMI

The German Manufacturing PMI rose to its highest level in just 33 months in October to 55.1, September recorded 54.3.

Purchasing activity increased strongly, while post-production inventories were reduced further.

 

EU – German Flash Services PMI

After the slump of the 50.9 score in September, the German Services PMI bounced back up again to a more confident level of 54.1 in October.

 

EU – French Flash Manufacturing PMI

After being in the sub 50 numbers for nearly this entire year, the French manufacturing PMI finally recorded a 51.3 in October, indicating expansion.

 

EU – French Flash Services PMI

The French services sector rose lower at a number of 52.1 in October, compared to a revised 53.3 in September.

However, the services PMI has been above the 50 level for the past 4 months, indicating that the sector is showing growth.

 

EU – Eurozone Flash Manufacturing PMI

The manufacturing PMI for the entire Eurozone recorded a 30 month high at 53.3.

The last time the Eurozone recorded a number lower than 50 was in June 2013.

 

EU – Eurozone Flash Services PMI

The services sector in the Eurozone recorded a third consecutive month of increase and came in at 53.5 for October.

The Eurozone’s services sector has been steadily above 50 since August 2013.

 

Japan – Trade Balance

Japan managed to end September with a positive trade balance, resulting in a seasonally adjusted surplus of 349B JPY.

Despite Japan’s exports declining for 12 consecutive months (6.9%), its imports fell at much higher level (16.3%), thus resulting in the trade surplus for September.

 

Japan – Flash Manufacturing PMI

The Japanese manufacturing sector PMI came in at 51.7 in October, 50.4 in September.

The highest rate of improvement in 9 months.

 

Upcoming Data Releases

Tuesday 25 October will see the release of US consumer confidence and the German Ifo business climate report. Also keep an eye out for the bigwigs in central banking as ECB President Mario Draghi, BOE Governor Mark Carney and BOC Governor Stephen Poloz all have speaking engagements.

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