New Developments Abroad: Mixed Inflation News

August 12, 2008

The dollar continued to recover overnight, gaining 0.5% against sterling to a 21-month high.  It also rose 0.5% against the kiwi, 1.1% versus the Australian dollar, 0.3% relative to the Swiss franc, and 0.1% against the euro, yen, and Canadian dollar. The dollar touched its highest level against the yuan since June 23rd.

Most Asian equity markets fell.  Nikkei -1.0%. China -0.5%. Taiwan -0.4%. Indonesia -3.6%.  India -1.8%. New Zealand -0.5%.

The German Dax and British Ftse are 0.3% lower. Most sovereign bond yields are down.  An exception is a 1-basis point rise in the 10-year JGB yield to 1.465%.

Oil is trading 1.2% lower at $113.06 per barrel despite attacks on Georgian and Nigerian facilities.  Gold got as low as $802.34/ounce, weakest since December and 22.3% below its record high last March.

British CPI inflation accelerated more than forecast from 3.8% y/y in June to 4.4% in July, most since April 1992.  RPI inflation, upon which many wages are based, rose 5.0% y/y, up from 4.5%.  RPIX advanced 5.3%, up from 4.8%.  Food (13.7% y/y) and fuel (25.7%) led the advance.

French harmonized consumer price inflation stayed at 4.0% in July, held down by summer clothing discounts.  Although at a 12-year high, the CPI did not accelerate as expected.

Chinese CPI inflation of 6.3% y/y in July was below forecasts and down from 7.1% in June and a 2008 peak of 8.7% in February.

New Zealand house prices fell 1.5% y/y in July, as house sales plunged 33%.

Japanese corporate goods prices, akin to the old WPI, hit a 27-year peak in July of 7.1%, up from 5.7% in June.  A 5.8% increase had been expected.

The decline in June Japanese industrial production was revised to 2.2% from 2.0% and resulted in no change from June 2007.  Capacity use fell 1.7% m/m, while capacity was unchanged on the month.  Consumer confidence dropped in July for a fourth consecutive month to 31.4, a 26-year low.

Australian business conditions sank from zero in June to -5 in July, lowest since right after the 9-11 attacks. Business sentiment held steady at a low -9.

Same-store sales, according to the British Retail Consortium, fell for the fourth time in five months in July.  such fell 0.9% y/y.  Total sales rose 1.7%.

Staying in the U.K., the DCLG house price balance firmed only 0.6% y/y in June, down from 3.0% in May.

Industrial production growth in India accelerated to 5.4% in June from 4.1% in May.

Swedish unemployment edged up to 2.9% in July from 2.8% in June.

The French current account deficit widened 57% to EUR 4.4 billion in June from May.

Foreign direct investment inflows in China rose 44.5% y/y in January-July and by about 65% in July alone.

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