New Overnight Developments Abroad: Waiting for U.S. Employment Figures
March 6, 2009
The dollar has relinquished ground, dropping most sharply against the Swiss franc (1.3%) and yen (1.2%) but also by 0.9% against the euro, 0.7% against sterling, 0.6% versus the kiwi, 0.4% against the Canadian dollar, and 0.1% relative to the Australian dollar.
In Japan, the Nikkei fell another 3.5%, and the Topix closed at a 25-year low. Stocks also fell 2.4% in Hong Kong, 1.4% in Australia, 1.3% in Malyasia, and 0.8% in China despite further assurances by Beijing officials that steps will be taken to assure 8% growth in 2009. In Europe, the Paris Cac is 0.6% lower, and the German Dax and British Ftse are down 0.3%. Market concerns center around GM and the financial shares. Citi is now a penny stock.
Under no U.S. prior president did the DOW decline by 20% as quickly as it has under Obama. He has met more political resistance than expected to his wide-ranging agenda, and progress in appointing top officials especially in the key Treasury Department has been very poor.
The yield on 10-year JGB’s slid 1.5 basis points to 1.295%.
Gold recovered by a further 1.4% to $940.90 per ounce. Oil also firmed 1.4% to $44.30 per barrel.
Swiss and British price data showed more residual inflation than foreseen.
- Swiss consumer prices firmed 0.2% in February, lifting the 12-month change from -0.1% in January to +0.2%. The Swiss National Bank is nonetheless still expected to halve its key interest rate to 0.25% on March 12th.
- British producer output prices firmed 0.1% in February and by 3.1% from Feb 2008. Core posted a 12-month advance of 3.7%, down from 4.0%. Producer input prices increased 0.6% on month, much more than expected, and by 0.5% y/y. Its core index went up 9.0% from February 2008.
The 3-month Euribor rate dropped another 9.9 basis points this week.
Norwegian factory output dropped 1.3% in January and by 4.0% from a year earlier.
As expected, Peru’s central bank announced late yesterday a 25-basis point cut in its key rate to 6.0%. It was the second reduction of 2009.
Uganda’s central bank reduced its key rate by 39 basis points to 15.88%.
British real construction spending fell 7% last quarter.
The OECD index of leading economic indicators dropped a full point to 92.3 in January to just 0.6 points above the all-time low for this 44-year-old data series. That low was seen in the 1974-75 recession. Deterioration in the OECD index was widespread but sharpest in the cases of Russia and Brazil.
The Bank of Mexico will step up intervention support for the peso.
German service-sector jobs rose 0.9% in the year to 4Q08 but fell by 1.6% from the third quarter.
The U.S. February labor survey will be released at 13:30 GMT. All signs point to another employment drop of at least 600K.
Copyright 2009 Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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