The Global Markets Weekly – 11/29/13

Posted December 2, 2013 by rvillareal

Japan CPI

Japan’s October Consumer Price Index showed an acceleration in the “core,” ex-fresh-foods, index, with the year-on-year increase stepping up to +0.9%, from +0.7% in September.  What was particularly noteworthy was that the bump was centered in components making up the narrower Western-style ex-food-and-energy “core.”  That index was up 0.3% year on year, after holding steady year on year in September. [private]

As has been the case for some time however, the firmness in the ex-food-and-energy result was quite narrow—centered in the “furniture and household utensils” category, where the weak yen is a big factor, in “culture and recreation,” where the currency probably contributed to jumps for hotel rates and package-tour fees, and in the “miscellaneous” category, with personal effects prices, another yen-driven category, and insurance premiums jumping.

Such price increases can be sustained, for the moment, because consumer spending is relatively healthy.  However, with many households not benefitting from stock market gains, and general consumer incomes depressed, the “tax” aspects of externally driven price increases may come to the fore, restraining any overall pick up in inflation.

• U.S.: The week brings several reports that FOMC voters must regard favorably if there is to be any real discussion of a December tapering move. They start with the November ISM Manufacturing Survey (Mon), continue with the revised third-quarter GDP figures (Thu), and conclude with the November employment report (Fri).
• Eurozone: Markets will be looking for the upcoming monthly update from the ECB with less of a keen eye than last month given that the November rate cut has all but extinguished speculation of action this time.  As a result, the ECB Council meeting (Thu) is very likely to conclude with no change in rates or fresh liquidity initiatives but with a clear focus on the ECB forecast update.
• UK: Thursday sees both a fiscal and monetary update occurring but with little likely to move markets.  Instead, the PMI data may offer seemingly conflicting messages.
• Japan:  Data are very sparse this week, with the only really significant release being the fourth-quarter Ministry of Finance Corporate Financial Statistics (Mon).
• Emerging Markets/Regions:  In China, two sets of November PMIs are due, both unlikely to describe anything other than a relatively steady expansion, but with some fluctuation, this time downwards.  In Korea, November trade and inflation, plus Q3 GDP (Wed) arrive.  In Mexico,, BdeM meets (Fri).  Markets would be surprised, given recent public statements by leading policymakers, to see rates cut again.   In Brazil, Real GDP (Tue) probably decelerated on an annual basis, although it is still likely to post a quarterly seasonally adjusted gain.  DE’s estimate is somewhat above Consensus. In Turkey, November’s CPI inflation (Tue) is likely to have moved sideways.

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