New Developments Abroad: Festering U.S. Credit Loss Concerns
July 11, 2008
The dollar fell 0.2% against the euro, Swissy and Australian dollar but is unchanged against the yen, sterling, and Canadian dollar.
The 10-year JGB yield ranged widely between 1.555% and 1.625% and is 2 bps higher net at 1.595%. Other sovereign bond yields are up mostly.
The Nikkei closed off 0.2%. China’s CSI 300 lost 0.7%, but the Hang Seng recovered 1.7%. India’s bourse fell 3.1%, as reported on-year industrial output growth of 3.8% in May was half expectations and at a six-plus year low. In Europe, the Dax (off 0.4%) and Cac40 (-0.8%) are lower, while the British Ftse is 0.4% higher.
Oil is at $144.90/barrel, up 2.3% overnight and 6.5% greater than Wednesday’s closing. A debate continues over whether a tight supply/demand balance is the main problem or if speculation is the primary cause of this crisis. Most economists agree that it is a supply/demand squeeze. Gold firmed another 0.9% to $950.80/oz. It has risen 3.4% since Tuesday.
There are press reports that the government may take over Fannie Mae and Freddie Mac.
Quarterly Japanese consumer confidence fell 4.2 points between March and June to 32.3, lowest since at least 1982. The monthly gauge was at 32.8, down from 34.9 in May, 36.0 in April and 37.6 in march. Revised industrial production show such up 2.8% m/m in May but 0.6% lower in April-May than the 1Q08 mean level. Industrial production was 1.1% greater than in May 2007.
German wholesale prices rose by an as-expected 0.9% in June following monthly advances of 1.4% in May, 0.6% in April and 1.6% in March. Mineral oil prices are 24.3% higher than in June 2007. Overall WPI inflation of 8.9% is its highest level since January 1982.
Foreign direct investment into China increased 45.6% in 1H08.
Consumer prices in Spain increased 0.6% m/m and 5.0% in June, a 13-year peak.
The central bank in Russia raised its refinancing rate by 25 basis points to 11.0%.
The Bank of Korea lent further intervention support to the won today, and President Lee reiterated inflation containment is the top policy priority.
Factory output growth in Malaysia sunk to a 9-month low in May. Evidence is mounting of softer growth in emerging Asia outside of China.
Canada reports June labor statistics in 15 minutes. Canadian and U.S. monthly trade data are due at 12:30 GMT.
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