Financial Market Metrics - February 2019 (part 4 of 4)

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Market Summary & Metrics - February 2019

International Landscape

German manufacturing orders slumped in December, led by a sharp drop in orders from outside the eurozone as Berlin said that total manufacturing orders declined 1.6% from November, while economists polled by The Wall Street Journal had expected a 0.3% rise. The economics ministry said "the dry spell in German industry" appears to be continuing.

Slipping for the third consecutive month, eurozone inflation rose 1.4% in January - down from the 1.6% reported in December - thanks to lower energy costs. Core inflation slightly increased, however, a comforting sign for the European Central Bank and its monetary policy decisions. Excluding volatile energy and unprocessed food prices, the indicator inched up to 1.2% in January, above expectations of an unchanged 1.1% reading.

China’s year-over-year PPI growth slowed to 0.1% in January, below the 0.3% expectation, marking the seventh consecutive monthly dip. Slowing factory inflation also raised strong concerns about growing deflation and the issues that it may pose for corporate profits. Such metrics will force Beijing to ply the economy with more debt, according to UBS Group AG. The bank argued that China’s total debt-to-gross-domestic-product ratio will rise again this year, after remaining flat in 2017 and declining in 2018. The analysis followed a rise in new credit in January that exceeded expectations. However, the NDRC said the government will implement measures to further boost domestic consumption this year. China will boost the incomes of urban and rural residents, and domestic consumption is expected to continue to expand and upgrade. It said it is confident of meeting its growth target in 2019.

Japan’s Manufacturing PMI in January fell to its lowest level since August 2016 as production and order books deteriorate and a global trade downturn took a toll on the country's exporters.

In Latin America, Mexican consumer confidence rose to 116.8, the highest level since August 2001 and up from 12- and 24-month averages of 99.8 and 93.2 respectively following the election of President Andres Manuel Lopez Obrador’s last December.

Within Emerging Markets, Reuters reports that monetary policy across a group of 37 developing markets has shifted from tightening to loosening. A net 3 central banks cut rates in February compared to 1 net hike in January, which was the 9th consecutive month of net hikes or no change, the longest such run since the summer of 2011 as policymakers battled the fallout from the stronger dollar.

Braun-Bostich & Associates, Inc.

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