New Developments Abroad
June 24, 2008
The dollar is mixed, with drops of 0.6% against the Swiss franc and 0.3% each against the Aussie dollar and euro but with gains of 0.2% against the Canadian dollar and 0.1% each versus sterling and the yen. The kiwi is unchanged.
Little change overnight in most sovereign bond yields. The FOMC is expected to announce no change in the 2.0% Federal Funds rate tomorrow following a 2-day meeting that begins today. A diversity of opinions among policymakers has emerged centered on how aggressively to respond to inflation while growth remains very tenuous.
The ten-year JGB yield slid 1.5 basis points to 1.70% and touched 1.69% during the day versus last week’s high of 1.896%. Two-year auction results included a bid-cover ratio of just 2.47.
Oil (+0.7% to $1378.63/bbl) and gold (+0.5% to $891.60/oz) are trading somewhat higher.
European stocks have made sharp declines of 1.5% in the Dax and Cac40 and 1.1% in the Ftse. The Hang Seng fell 1.1%, but China’s CSI 300 climbed 2.2%. The Nikkei dipped 0.1%.
On the heels of Monday’s disappointing Ezone PMI results came news today of sharp declines in German and Italian consumer sentiment. Germany’s 3.9 score after 4.7 constitutes a 2-year low. The Italian index sagged to 100 from 103.2. French consumer spending, however, jumped by an unexpected 2.0% in May, three times more than forecast on a 5.6% rebound in car purchases. French business sentiment stayed at 102 in June instead of dropping a point as forecast. Such was at 108 in March, and French housing approvals plunged by 19.9% y/y in March-May and by 10.7% y/y in May alone.
Two vacancies remain on the BOJ policy board after the LDP’s political opposition rejected yet another proposed candidate.
Swiss consumer spending fell to an 17-month low in May. Denmark reported the weakest reading for its consumer confidence since February 1999.
Russian GDP rose 8.4% y/y in January-May on the strength of oil.
China’s yuan edged up to another new high for the move and shows an annualized gain of 13.6% since end-2007 as midyear fast approaches.
According to data from the British Banking Association, home mortgage approvals sank 56.1% y/y to their lowest level since at least 1997.
U.S. home prices and consumer confidence will be released today.
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