Canada: New Housing Price Index, June 2018

New home prices increased in June, marking the first upward movement since November 2017.

New Housing Price Index, monthly change

Nationally, new house prices edged up 0.1% in June, largely due to rising construction costs across the country. The cost of softwood lumber, which is widely used in residential construction, has been on the rise. According to the Industrial Product Price Index, the price of softwood lumber (except tongue and groove and other edge worked lumber) rose 34.3% year over year in June.

Among the 11 surveyed census metropolitan areas (CMAs) reporting growth in June, the largest increases were in Montréal (+1.0%) and Ottawa (+0.7%). Builders in both markets linked the gains to rising construction and land development costs. Other notable rises occurred in St. Catharines–Niagara (+0.5%) and Greater Sudbury (+0.4%).

In the west, prices for new homes were up in Calgary (+0.3%), Edmonton (+0.2%) and Vancouver (+0.2%). The increase in Vancouver follows five months of flat prices.

Six CMAs reported declines in June, with Oshawa (-0.3%) registering the largest decrease.

New home prices were unchanged in Toronto in June. Prices in this market have been flat or declining since November 2017.

New Housing Price Index, 12-month change

New house prices rose 0.8% year over year in June. The largest 12-month gains were in Ottawa (+5.0%) and London (+4.8%).

Among the four CMAs reporting declines, Toronto (-1.3%) and Regina (-1.2%) recorded the largest 12-month decreases.


U.S Producer Price Indexes – July 2018

The Producer Price Index for final demand was unchanged in July, seasonally adjusted, the U.S.
Bureau of Labor Statistics reported today. Final demand prices advanced 0.3 percent in June and
0.5 percent in May. (See table A.) On an unadjusted basis, the final demand index increased 3.3
percent for the 12 months ended in July.

In July, a 0.1-percent rise in the index for final demand goods offset a 0.1-percent decline in
prices for final demand services.

The index for final demand less foods, energy, and trade services moved up 0.3 percent in July,
the same as in June. For the 12 months ended in July, prices for final demand less foods, energy,
and trade services climbed 2.8 percent.

Final Demand

Final demand goods: The index for final demand goods inched up 0.1 percent in July, the same as
in June. The July advance in prices for final demand goods can be traced to a 0.3-percent rise in the
index for final demand goods less foods and energy. In contrast, prices for final demand energy fell
0.5 percent, and the index for final demand foods decreased 0.1 percent.

Product detail: In July, a major factor in the increase in prices for final demand goods was the index
for pharmaceutical preparations, which rose 0.7 percent. Prices for eggs for fresh use, fresh fruits and
melons, motor vehicles, and liquefied petroleum gas also moved higher. Conversely, the electric
power index fell 1.6 percent. Prices for meats; hay, hayseeds, and oilseeds; and nonferrous scrap also
decreased. (See table 4.)

Final demand services: Prices for final demand services edged down 0.1 percent in July, the first
decline since falling 0.2 percent in December 2017. The July decrease is attributable to the index for
final demand trade services, which moved down 0.8 percent. (Trade indexes measure changes in
margins received by wholesalers and retailers.) In contrast, prices for final demand services less
trade, transportation, and warehousing and the index for final demand transportation and
warehousing services advanced 0.3 percent.

Product detail: Leading the July decline in prices for final demand services, margins for fuels and
lubricants retailing dropped 12.7 percent. The indexes for machinery and equipment parts and
supplies wholesaling, food retailing, hospital outpatient care, and airline passenger services also
moved lower. Conversely, prices for guestroom rental climbed 3.9 percent. The indexes for apparel,
jewelry, footwear, and accessories retailing; inpatient care; and truck transportation of freight also

U.S Bureau of Labor statistics

U.S unemployment insurance weekly claims

In the week ending August 4, the advance figure for seasonally adjusted initial claims was 213,000, a decrease of 6,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 218,000 to 219,000. The 4-week moving average was 214,250, a decrease of 500 from the previous week’s revised average. The previous week’s average was revised up by 250 from 214,500 to 214,750.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending July 28, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 28 was 1,755,000, an increase of 29,000 from the previous week’s revised level. The previous week’s level was revised up 2,000 from 1,724,000 to 1,726,000. The 4-week moving average was 1,745,250, an increase of 3,000 from the previous week’s revised average. The previous week’s average was revised up by 500 from 1,741,750 to 1,742,250.

Read more Department of Labor

Turkish lira loses another 3%

Thursday August 9: Five things the markets are talking about

The geopolitical tension theme continues to dominate capital markets, now that China has responded to the U.S’s tariff onslaught with additional tariffs of its own.

In currencies, the market is again focused on sterling (£1.2852) as it encroaches on its new 12-month low as politics continues to provide the overriding direction for the currency.

And then there is the Turkish lira ($5.4210) as it makes it way towards record lows on market worries about President Erodgan’s grip on monetary policy and on a deepening dispute with the Trump administration.

Down-under, the kiwi (NZ$0.6645) has plummeted to a two-year low after the Reserve Bank of New Zealand (RBNZ) pushed out its forecast for a rate increase.

Elsewhere, oil has extended its drop as trade tensions again overshadow a decline in U.S crude stockpiles. Most industrial metals gained, while gold prices ease.

1. Stocks mixed reaction on low volumes

In Japan, the Nikkei edged lower overnight as a stronger yen (¥111.00) impeded investor risk appetite. Not helping was the auto sector, which saw a sell-off on news that certain automakers improperly conducted vehicle inspections in the domestic market. The Nikkei share average dropped -0.2%, while the broader Topix lost -0.3%.

Down-under, Aussie shares rallied overnight on a stronger earnings season. The S&P/ASX 200 index rose +0.5%. In S. Korea, the Kospi stock index produced a small gain, rallying +0.10%.

In Hong Kong and China, shares ended higher as tech firms rally on hopes of China policy boost. The Hang Seng index was up +0.88%, while the Hang Seng China Enterprises index rose +1.09%. In China, the Shanghai Composite index ended +1.9% higher, while China’s blue-chip CSI300 index closed up +2.5%.

In Europe, regional bourses are trading mostly lower in quite trading. U.S stocks are set to open little changed.

Indices: Stoxx600 -0.2% at 388.8, FTSE -0.6% at 7729, DAX 0.0% at 12633, CAC-40 -0.2% at 5492, IBEX-35 0.0% at 9755, FTSE MIB +0.0% at 21801, SMI -0.3% at 9149 S&P 500 Futures 0.1%

2. Oil finds some support after a -3% drop Wednesday, gold steady

Oil prices are a tad higher after yesterdays steep slide, when the first round of U.S sanctions against Iran came into effect. Not providing much support is investor worries that crude demand will and has been hit by the escalating Sino-U.S trade dispute.

Brent crude futures are up +14c at +$72.42 barrel, after having dropped by more than -3% yesterday. U.S crude futures (WTI) have rallied +8c to +$67.02 a barrel, having closed down -3.2% Wednesday.

With U.S sanctions against Iran, which shipped out +3M bpd of crude in July, officially came into effect on Tuesday and the market is anticipating that supply losses could range from +600K to +1.5M bpd.

Stateside yesterday, the weekly EIA report showed that crude inventories fell -1.4M barrels last week, less than half the -3.3M barrel draw the market had expected and that gas stocks rose by +2.9M barrels, compared with expectations for a drop of -1.7M barrel drop.

Ahead of the U.S open, gold prices are mostly steady in a range-bound overnight session, as a stronger dollar continues to weigh on upside momentum. Spot gold is up +0.1% at +$1,214.23 an ounce, having gained +0.2% Wednesday.

3. RBNZ Extra Cautious

Reserve Bank of New Zealand (RBNZ) Governor Orr left interest unchanged at +1.75% as expected, while moving the timing of any future increase to Q4 in 2020 from Q1 in the same year.

Assistant Governor McDermott indicated that the chance of a rate cut had increased and wanted the market to understand that they needed to see core-inflation above +2% for any rate hike. The direction of the next move could be “up or down,” he says. The cautious comments saw the NZD ($0.6650) weaken by -0.45% outright.

Elsewhere, the yield on 10-year Treasuries decreased -1 bps to +2.95%. In Germany, the 10-year Bund yield dipped -2 bps to +0.39%, while in the U.K, the 10-year Gilt yield also declined -2 bps to +1.299%.

4. Turkish lira loses another 3% outright

The Turkish lira has hit a new record low this morning as it weakens as much as -3% outright on souring relations with the U.S over the detention of an American pastor. USD/TRY is last up +2.3% at $5.3994, after it hit a record high of $5.4488 earlier.

EUR/USD (€1.1596) is holding below the €1.16 level as the techies continue to watch their significant support level at €1.15. A break opens the door for a possible test to €1.10 handle.

GBP (£1.2890) remains on the softer side on a ‘no-deal’ Brexit worries. The pair tested its 11-month low atop of £1.2850 earlier this morning.

USD/JPY (¥111.14) is a tad higher, but stable ahead of the U.S-Japan trade talks that begin in Washington later today.

RUB ($65.88) is weaker by -1%, testing its two-year low outright following the U.S State Department announcement on Russian sanctions related to a chemical agent being used in a U.K spy attack last March.

5. ECB economic bulletin highlight

According to the ECB in its regular economic bulletin released earlier this morning, the risks to global growth are growing.

“Downside risks to the global economy have intensified amid actions and threats regarding trade tariff increases by the United States and possible retaliation by the affected countries,” the ECB said in an assessment.

The ECB added that if all the threatened measures were to be implemented, the average U.S tariff rate would rise to levels not seen in the last 50-years.

Note: A fortnight ago, the ECB kept policy unchanged, staying on course to end its QE program by the close of the year and to raise rates for the first time since the euro zone debt crisis in the autumn of 2019.

Forex heatmap

Oil Prices Now Depend on Iranian Response to US Sanctions

A wave of sanctions on Iran snapped back into place this week, giving commodity bulls a reason to believe higher oil prices are in the offing.

While commodity traders are focused on the impact of Iranian oil coming out of circulation, they are missing a greater catalyst that could disrupt global markets, says one expert.

West Texas Intermediate graph

“What I think we really want to be watching over the next couple of weeks is really what happens in terms of the Iranian response to the re-imposition of sanctions,” Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC’s “Futures Now” on Tuesday.

“Do we see the Iranians, for example, restart their nuclear program? Do we see more aggressive efforts to target ships in key waterways?” Croft continued.

U.S. officials said this week that the renewed sanctions would have a significant impact on the Iranian economy. However, Croft notes that the Iranian government shows little signs of backing down. Iran President Hassan Rouhani previously threatened to block the Strait of Hormuz, a major oil transport artery, if the U.S. intervened in the nation’s exports.

via CNBC

Fed Barkin Says Gradually Raising Rates a Sensible Approach

The U.S. economy is strong enough to warrant further interest rate increases by the Federal Reserve, Richmond Fed President Thomas Barkin said on Wednesday.

In a speech on the U.S. economy, Barkin argued that the Fed’s benchmark interest rate was below normal levels, a suggestion that Fed policy was still stimulating economic growth, which he said was solid.

“It is difficult to argue that lower than normal rates are appropriate when unemployment is low and inflation is effectively at the Feds target,” Barkin said in Roanoke, Virginia.

The U.S. central bank kept interest rates unchanged last week, but its statement pointed to strength in the economy and bolstered expectations it would raise borrowing costs in September.

The Fed has been slowly raising interest rates since 2015. Barkin told reporters afterward that gradually raising rates was a “sensible” approach.

via CNBC

China to Add 25% Tariff on $16B of US Imports

China is slapping additional tariffs of 25 percent on $16 billion worth of U.S. imports from fuel and steel products to autos and medical equipment, the Chinese commerce ministry said, as the world’s largest economies escalated their trade dispute.

The tariffs will be activated on Aug. 23, the ministry said, the same day that the United States plans to begin collecting 25 percent extra in tariffs on $16 billion of Chinese goods.

via Reuters

Soybeans Rising ahead of October Purchases by China

Trade war conflicts have caused soybeans to suffer this year, but after a 10 percent surge in the last month, one trader expects the rally to continue to grow.

Bill Baruch, president of Blue Line Futures, told CNBC’s “Trading Nation” on Tuesday that he has a bullish outlook on soybeans and China. Here is what he had to say:

The biggest casualty from China’s retaliation to the U.S. tariffs was soybeans.

Soybeans lost as much as 22 percent from the May 29 high through the July low, their worst levels since December 2008, before stabilizing.

Soybeans are extremely undervalued at $9 a bushel because China doesn’t start making its largest purchases until October and there is light at the end of the tunnel for this war.

via CNBC

Germany to Increase Oversight in Foreign Investment Deals

Germany is to increase its powers to block foreign investments by significantly lowering the threshold for deals that can be subject to ministerial veto, in a further sign of growing protectionist sentiment towards Chinese acquisitions.

Berlin can veto deals that involve the purchase of at least 25 percent of the equity of a German company by an entity from outside the EU, and only if they endanger public order or national security. Ministers now want to reduce that threshold to 15 per cent.

Peter Altmaier, economics minister, told the newspaper Die Welt that the threshold would be lowered “so that we can check more acquisitions in sensitive sectors of the economy”. Die Welt said the new bill could come into force this year.

via CNBC

Brexit Worries Take Pound Lower

The pound has fallen below $1.29 for the first time in almost a year on continuing worries Britain will leave the EU without a trade deal.

Sterling also hit a nine-month low against the euro, and was down against the yen and Swiss franc.

Bank of England governor Mark Carney said on Friday the chances of a no-deal Brexit were “uncomfortably high”.

On Sunday, international trade secretary Liam Fox put the odds at “certainly not much more than 60-40”.

The falls come despite a rise in UK interest rates, which usually pushes up the value of sterling.

Since the beginning of the month, the pound has fallen 1.7% against the dollar and 0.8% against the euro.

via BBC