Hello. Today we look at how the spreading delta variant risks snarling global supply chains, the week ahead in global economics and concerns over just how much fiscal room the U.S. really has.
Supply Chain Strain
After weathering earlier pandemic waves better than other regions, the fast-spreading delta variant has thrown into turmoil factories and ports in countries that were once among the most successful containing the virus.
The snarls in Asia — where the United Nations estimates around 42% of global exports are sourced — risk twisting their way through global supply chains just as shipments would usually ramp up for the Christmas holiday shopping season.
The flare-ups worsen an already tortured year for exporters, with shipping costs sky-high due to a shortage of containers and as raw materials such as semiconductors become pricier and difficult to source.
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In China, the world’s third-busiest container port was partly shut recently, while in Southeast Asia — among the worst-hit regions — factory executives have stalled production of electronics, garments and other products.
In the U.S., investors will be eyeing the latest retail sales data on Tuesday to see if consumer demand remains strong and if the shift in spending to services from goods continued in July. Other reports due include those on business inventories, industrial production, housing starts, and weekly jobless claims.
Elsewhere, central bankers in New Zealand are predicted to hike interest rates, while their counterparts in Indonesia, Norway, and Namibia are expected to hold.
China Slows | China’s economic activity slowed more than expected in July, with fresh virus outbreaks adding new risks to a recovery already hit by floods and faltering global demand.
Avoiding recession | Japan skirted a recession last quarter as a rebound in consumer spending defied virus restrictions, but the increased activity is also fueling the spread of Covid-19.
Europe boom | Italy and Spain are set to record the fastest pace of economic expansion this year in more than four decades, a strong rebound that will help the countries overcome last year’s deep recession.
Data dependent | A few more strong jobs reports in coming months would mark enough progress in the recovery from the pandemic to allow the U.S. central bank to begin winding down its bond-buying program, Federal Reserve Bank of Minneapolis President Neel Kashkari said.
Dollar threat | Niall Ferguson and John Authers look at the lessons to be learned from Richard Nixon’s scrapping of the Bretton Woods monetary order.
The U.S.’s low government bond yields exaggerate fiscal space available for deficit spending because Federal Reserve purchases are distorting market prices, the Institute of International Finance said.
In a paper examining ballooning government debt levels and record-low interest rates, the IIF sought to gauge available deficit financing by estimating how much debt governments could sell to markets at low yields. It tapped flow of funds data in order to split out central bank purchases from demand for government bonds.
“The remainder is what markets were willing to finance and that number – for the U.S. – has declined versus the global financial crisis,” the IIF’s Robin Brooks, Jonathan Fortun and Jack Pingle said in an Aug. 12 research note.
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Obedience in the labor market and social mobility:
The fourth annual Bloomberg New Economy Forum will convene the world’s most influential leaders in Singapore on Nov. 16-19 to mobilize behind the effort to build a sustainable and inclusive global economy. Learn more here.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
