Posted May 12, 2022 by Martin Armstrong
China may have to issue more debt as it tries to keep growing in the face of Covid lockdowns that are stunting its economy. The country has signaled in recent weeks that it still wants to meet its growth target of 5.5% this year. China’s Politburo meeting on April 29 sent a “strong signal that policymakers are committed to this year’s GDP target despite downside risks from COVID-19 disruptions and geopolitical tensions,” ANZ Research analysts wrote in a note on the same day. Chinese state media on Friday reported details of that Politburo meeting, in which officials promised more support for the economy to meet the country’s economic growth target for the year. That support would include infrastructure investment, tax cuts and rebates, measures to boost consumption, and other relief measures for companies.
India’s central bank is likely to raise its inflation projection for the current fiscal year at its June monetary policy meeting and will consider more interest rate hikes, a source aware of the development said on Wednesday. In its first rate move in two years and its first hike in nearly four, the Reserve Bank of India (RBI) raised the repo rate by 40 basis points (bps) to 4.40% following an emergency meeting earlier this month. In April, RBI raised its inflation forecast for the current fiscal year to 5.7%, 120 bps above its forecast in February, while cutting its economic growth forecast to 7.2% for 2022/23 from 7.8%.
The major Asian stock markets had a negative day today: • NIKKEI 225 decreased 464.92 points or -1.77% to 25,748.72 • Shanghai decreased 3.71 p oints or -0.12% to 3,054.99 • Hang Seng decreased 444.23 points or -2.24% to 19,380.34 • ASX 200 decreased 123.70 points or -1.75% to 6,941.00 • Kospi decreased 42.19 points or -1.63% to 2,550.08 • SENSEX decreased 1,158.08 points or -2.14% to 52,930.31 • Nifty50 decreased 359.10 points or -2.22% to 15,808.00 The major Asian currency markets had a mixed day today: • AUDUSD decreased 0.00842 or -1.21% to 0.68522 • NZDUSD decreased 0.00544 or -0.86% to 0.62351 • USDJPY decreased 1.532 or -1.18% to 128.308 • USDCNY increased 0.06087 or 0.90% to 6.82166 Precious Metals: • Gold decreased 26.13 USD/t oz. or -1.41% to 1,825.99 • Silver decreased 0.782 USD/t. oz or -3.63% to 20.773 Some economic news from last night: Japan: Adjusted Current Account increased from 0.52T to 1.56T Bank Lending (YoY) (Apr) increased from 0.5% to 0.9% Current Account n.s.a. (Mar) increased from 1.648T to 2.549T Foreign Bonds Buying increased from -1,155.6B to -823.1B Foreign Investments in Japanese Stocks decreased from 595.1B to 81.2B South Korea: M2 Money supply (Mar) decreased from 9.50% to 8.50% Australia: MI Inflation Expectations decreased from 5.2% to 5.0% Private House Approvals (Apr) decreased from 14.6% to -3.0% New Zealand: Inflation Expectations (QoQ) remain the same at 3.3% External Migration & Visitors (Mar) increased from -1.20% to 517.00% FPI (MoM) (Apr) decreased from 0.7% to 0.1% Permanent/Long-Term Migration (Mar) increased from -937 to 1,177 Indonesia: Retail Sales (YoY) (Mar) decreased from 12.9% to 9.3% Some economic news from today China: FDI (Apr) decreased from 25.60% to 20.50% Japan: Economy Watchers Current Index (Apr) increased from 47.8 to 50.4 India: CPI (YoY) (Apr) increased from 6.95% to 7.79% Cumulative Industrial Production (Mar) decreased from 12.50% to 11.30% Industrial Production (YoY) (Mar) increased from 1.7% to 1.9% Manufacturing Output (MoM) (Mar) increased from 0.8% to 0.9% EUROPE/EMEA:
Britain’s economy unexpectedly shrank in March, marking a weak end to the first quarter of a year when the risk of recession is looming and increasing pressure on the government to offer more support to inflation-hit households. Gross domestic product fell 0.1% from February, hurt by a slump in car sales due to supply-chain problems, the Office for National Statistics said. Last week, the central bank forecast inflation will surpass 10% in the final quarter of 2022, up from 7% in March, already more than three times its 2% target. The January-March period is likely to mark a high point for the year, with households facing their biggest squeeze on disposable income in decades as the policy dilemma facing a BoE intent on keeping a lid on inflation – while not choking off prospects for growth altogether – deeper.
The major Europe stock markets had a negative day: • CAC 40 decreased 63.47 points or -1.01% to 6,206.26 • FTSE 100 decreased 114.32 points or -1.56% to 7,233.34 • DAX 30 decreased 89.00 points or -0.64% to 13,739.64 The major Europe currency markets had a mixed day today: • EURUSD decreased 0.01420 or -1.35% to 1.03721 • GBPUSD decreased 0.00420 or -0.34% to 1.21935 • USDCHF increased 0.00985 or 0.99% to 1.00403 Some economic news from Europe today: UK: NIESR GDP Estimate decreased from 0.8% to 0.3% NIESR Monthly GDP Tracker decreased from 0.8% to 0.3% Thomson Reuters IPSOS PCSI (May) decreased from 46.4 to 43.7 Business Investment (QoQ) (Q1) decreased from 1.0% to -0.5% Business Investment (YoY) (Q1) increased from 1.0% to 8.5% Construction Output (MoM) (Mar) increased from 0.2% to 1.7% U.K. Construction Output (YoY) (Mar) decreased from 7.0% to 4.7% GDP (YoY) (Q1) increased from 6.6% to 8.7% GDP (MoM) decreased from 0.1% to -0.1% GDP (QoQ) (Q1) decreased from 1.3% to 0.8% Index of Services decreased from 0.8% to 0.4% Industrial Production (YoY) (Mar) decreased from 2.1% to 0.7% Industrial Production (MoM) (Mar) increased from -0.3% to -0.2% Manufacturing Production (MoM) (Mar) increased from -0.6% to -0.2% Manufacturing Production (YoY) (Mar) decreased from 3.5% to 1.9% Monthly GDP 3M/3M Change decreased from 1.0% to 0.8% Trade Balance (Mar) decreased from -21.61B to -23.90B Trade Balance Non-EU (Mar) decreased from -13.14B to -13.80B Swiss: PPI (YoY) (Apr) increased from 6.1% to 6.7% PPI (MoM) (Apr) increased from 0.8% to 1.3% Italy: Italy Thomson Reuters IPSOS PCSI (May) decreased from 42.43 to 41.73 Germany: Germany Thomson Reuters IPSOS PCSI (May) decreased from 47.75 to 46.88 France: France Thomson Reuters IPSOS PCSI (May) increased from 44.22 to 44.23 US/AMERICAS:
Jerome Powell will remain chairman of the Federal Reserve for a second term. The Senate voted overwhelming in his favor in a 80 to 19 vote. This gives Powell another four years at the helm of the world’s most powerful central bank. Powell was first nominated in 2017 under former President Trump but has received bipartisan support.
More troubling inflation data was released today by the Bureau of Labor and Statistics. Wholesale prices are up 11% from last March and 0.5% higher than February. Core PPI Rose 0.6% in April, up 6.9% on an annual basis, while headline PPI rose 1.6% in March (core 0.9%). Grocery costs have surged 1.5%, and gas continues to rise after posting a 1.7% increase.
Jobless claims for the first week of May increased by 1,000 to a total of 203,000. Continuing claims in the US fell to the lowest level since January 1970 after falling by 44,000 to 1.343 million.
US Market Closings:
- Dow declined 102.81 points or -0.33% to 31,730.3
- S&P 500 declined 5.1 points or -0.13% to 3,900.08
- Nasdaq advanced 6.73 points or 0.06% to 11,370.96
- Russell 2000 advanced 21.24 points or 1.24% to 1,739.38
Canada Market Closings:
- TSX Composite declined 138.2 points or -0.7% to 19,699.05
- TSX 60 declined 7.06 points or -0.59% to 1,199.5
Brazil Market Closing:
- Bovespa advanced 1,290.74 points or 1.24% to 105,687.64
ENERGY: The oil markets had a mixed day today: • Crude Oil decreased 0.28 USD/BBL or -0.26% to 105.4300 • Brent decreased 0.57 USD/BBL or -0.53% to 106.94 • Natural gas increased 0.142 USD/MMBtu or 1.86% to 7.7820 • Gasoline increased 0.0698 USD/GAL or 1.89% to 3.7553 • Heating oil decreased 0.0375 USD/GAL or -0.95% to 3.9137 The above data was collected around 13:25 EST on Thursday • Top commodity gainers: Natural Gas (1.86%) and Wheat (4.16%), Gasoline (1.89%), Corn (1.22%) • Top commodity losers: Zinc (-3.31%), Palladium (-6.28%), Silver (-3.63%) and Platinum (-4.99%) The above data was collected around 13:32 EST on Thursday. BONDS: Japan 0.244%(-0.5bp), US 2’s 2.55% (-0.094%), US 10’s 2.8353% (-8.93bps); US 30’s 3.00% (-0.049%), Bunds 0.854% (-15bp), France 1.367% (-12.9bp), Italy 2.732% (-15.9bp), Turkey 23.55% (+0bp), Greece 3.355% (-16.1bp), Portugal 1.962% (-14.8bp); Spain 1.918% (-11bp) and UK Gilts 1.6860% (-14.2bp).