New Overnight Developments Abroad: Yen, Dollar, Stocks, Bond Yields All Lower
February 24, 2009
The yen lost another 1.1% against the dollar, hitting a 12-week low.
The dollar in turn is weaker by 1.0% against the Swiss franc and Australian dollars, 0.9% against the euro, 0.8% against the kiwi, 0.4% against sterling and 0.1% against the Canadian dollar.
Ukraine’s hrynvia slumped to a new record low after a ratings cut by Moody’s. The South Korean won hit its lowest dollar value since mid-March 1998, weighed down by economic concerns but also worries about North Korean progress in developing long-range missiles.
Gilt, Bund, and JGB yields softened moderately. Gold eased 0.4% to $991/ounce. Oil is quoted below $40 at $38.37/barrel, down 0.2%.
The Nikkei fell by another 1.5%. Elsewhere in Asia, stock markets dropped 4.5% in China, 3.2% in South Korea, 3.5% in Vietnam, 2.9% in Hong Kong, 1.3% in Indonesia, 1.1% in the Philippines, and 1.0% in Singapore. Australian share prices lost 0.6%. In Europe, the Dax, Cac and Ftse are down 2.4%, 1.6%, and 1.3%.
Industrial orders in the euro area fell 5.2% in December from November after monthly declines of 4.9% in September, 4.7% in October and 5.4% in November. This is as close to free falling as it gets. Orders sank 43.3% at a seasonally adjusted rate last quarter and by 22.3% in the year to December.
Euroland’s seasonally adjusted current account posted an eighth straight deficit in December, albeit a smaller EUR 7.3 bln after EUR 13.9 bln in November. The 2008 deficit was EUR 63.2 bln versus a EUR 36.3 bln surplus in 2007. Portfolio investment generated a net EUR 412.4 bln inflow last year, up from EUR 137.7 bln in 2007. Direct investment accounted for a EUR 283.9 bln outflow after a EUR 90.4 bln outflow in 2007.
According to Germany’s IFO Institute, the business climate index ticked down to 82.6 in February from 83.0 in January and 82.7 in December. Such seems to be flattening due to an improved expectations component of 80.9 after 79.4 in January and 76.9 in December. But these remain very weak quotes.
Italian consumer confidence improved unexpectedly for a second consecutive month to 104.1 in February from 102.6 in January and 99.6 in December. The long-term mean is 113.
French consumer confidence printed in February at -43 similar to -42 in January, -44 in December and -43 in November. French consumer spending unexpectedly rebounded 1.8% in January versus a forecast 0.2% gain. Such had fallen 0.9% in December and were also up 1.8% in the year to January. French housing starts tumbled 20.2% in the year to November-January.
In another sign that Japanese deflation has returned, corporate service prices dived 0.9% last month and by 2.2% in the year to January. The 12-month change has not been in the black since August. Minutes from the Bank of Japan meeting on January 21-22 revealed that Suda still opposed corporate bond purchases, but a majority was more worried about falling inflation expectations and wanted to address elevated term rates.
South African real GDP slumped 1.8% at a seasonally adjusted annual rate last quarter due to a 21.8% plunge in manufacturing. South Korean consumer credit growth slowed to a single-digit pace of 9.1% y/y last quarter. Chinese President Hu sounded greater alarm about growth prospects and promised intensified policy support.
Bank Negara Malaysia cut its overnight policy rate by another 50 basis points to 2.0% and also reduced reserve requirements to 1% from 2%. Analysts had been divided over whether an additional rate cut would be announced.
Polish unadjusted retail sales tumbled 22.9% in January and rose just 1.3% from a year earlier, about half as much as expected.
The British distributive trades survey compiled by the CBI showed more hopeful results than expected, with a print of -25 after -47 in January. Although still deep in the red, this connoted the slowest rate of contraction since June of last year.
But British investment fell 3.9% in 4Q08, worst since the first quarter of 2003 and suggesting a downward revision to GDP growth. The on-year 7.7% decline was the most in 17 years. British Banking Association data indicated a 43.2% decline in mortgage approvals and net mortgage lending of only Gbp 2.9 billion, down from Gbp 3.3 bn in December.
Bernanke’s Humphrey-Hawkins testimony begins in the Senate at 10:00 EST. The U.S. Case-Shiller house price index and FHFA index also get released, as does the Conference Board’s gauge of consumer confidence. Weekly chain store sales and the Richmond Fed Manufacturing index arrive as well. In a busy day, Fisher and Duke of the Fed will be speaking, too.
Copyright 2009 Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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