Economy coasting along according to latest figures

Australia: 

Producer prices rose just 0.5% in the December quarter, for an annual rate of 0.7%, confirming that price pressures remain very subdued.

Trade price data indicated that the terms of trade surged in the December quarter. 

 

Export prices jumped 12.4%, reflecting a surge in prices of mostly commodity-based products. The increase was largely anticipated reflecting the rebound in commodity prices over the quarter and will provide a significant boost to incomes. Import prices were subdued, edging up 0.2% in the quarter.

Share Markets:

The US stockmarket softened on Friday night as disappointing earnings dampened investor enthusiasm. The Dow was unchanged, the S&P 500 slipped 0.1% and the Nasdaq lifted 0.1%.

Interest Rates:

US government bond yields fell after the release of US GDP and durable goods orders data, which disappointed investors.

The yield on the US 10-year bond fell 2 basis points to 2.48%. The yield on the US 2-year bond yield fell 1 basis point to 1.22%.

Foreign Exchange: 

The US dollar index (weighted against a basket of currencies) finished little changed from Friday morning, after falling earlier in response to the US economic data.

EUR/USD rose from 1.0658 to 1.0725, to currently trade just below that level, at around 1.0719. USD/JPY ranged between 114.39 and 115.38.

AUD/USD rose from 0.7512 to 0.7573 and is trading around 0.7559 at the time of writing. NZD/USD rose from 0.7232 to 0.7285. AUD/NZD ranged between 1.0369 and 1.0410.

Commodities:

The oil price edged lower amid speculation increased US drilling will increase the global oil supply. The oil price fell US$0.60 to US$53.20 per barrel.

United States: 

GDP growth was weaker than expected in Q4, rising by an annualised pace of 1.9%.

This followed annualised growth of 3.5% in Q3. In Q4, consumer spending rose by 2.5% and residential building investment and business investment gained.

Private domestic demand increased by 2.8% in Q4. After a sharp gain in Q3, a plunge in soybean exports weighed on GDP growth in Q4. The decline in exports in Q4 was the largest since Q1 2015.

Durable goods orders fell by 0.4% in December, defying consensus expectations for a reasonable lift of 2.5%.  This followed a downwardly revised decline of 4.8% in November (previously reported as a 4.5% fall.)

Excluding transportation, durable goods orders rose by 0.5% in December, following an increase of 1.0% in November.

Consumer sentiment edged up to 98.5 in the final reading for January, from a preliminary estimate of 98.1 according to the University of Michigan measure. This followed an increase in consumer sentiment to 98.2 in December.

University of Michigan inflation expectations for 5-10yrs ahead rose from December's 2.3% record low to 2.6%.


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