New Overnight Developments Abroad: New Round of Risk Aversion
March 12, 2009
The yen and dollar are higher, while stocks and bond yields are mostly lower.
The dollar lost 1.1% against the yen but is trading up 1.1% against the Australian dollar, 0.9% versus sterling, 0.4% against the euro, and 0.3% relative to the kiwi, Canadian dollar, and Swiss franc.
The Nikkei fell 2.4%, and the Dax, Cac40 and Ftse are trading off by 2.2%, 2.3%, and 1.7%. Stocks closed down 1.9% in Vietnam, 1.4% in Malaysia, 1.1% in The Philippines, and 0.8% in Singapore.
Japan’s 5-year JGB auction attracted decent support, but dip in 10-year yield to 1.29% proved fleeting. Yen demand said to be coming out of Japan ahead of fiscal yearend at the end of March.
Oil firmed 1.1% to $42.79, while gold edged 0.3% higher to $913.60.
Japanese negative growth last quarter revised to -12.1% at a seasonally adjusted annualized rate (saar) from -12.7%. However, a doubling of inventories points to very weak growth ahead. GDP deflator rose 0.7% y/y. Real exports and capex plunged by 44.9% saar and 19.8% saar.
Despite a rebound in energy, German industrial production tumbled by a record 7.5% in January, some 2-1/2 times more than street estimates. Production had fallen by 3.9% in December, and the December-January level was 15.3% less than a year earlier.
Japanese stock and bond transactions generated a Y 318 billion outflow last week, similar in size to the prior week.
Australian unemployment jumped 0.4 percentage points to 5.2% last month and was up from 4.5% in December and 3.9% a year earlier. Jobs unexpectedly rose 1.8K, but full-time workers declined 53.8K and by 65.9K over the last three reported months.
On the central bank watch, the Reserve Bank of New Zealand cut its cash rate by 50 basis points to 3.0%, the Bank of Brazil slashed its Selic rate by 150 basis points to 11.25% in follow-up to a 100-bp reduction on January 22nd, and the Bank of Korea somewhat unexpectedly left its key rate unchanged at 2.0% after six cuts totaling 325 bps between October 9th and February 12th. Central bank announcements are due today in Switzerland and Chile. The Swiss rate is expected to be reduced by 25 bps and Chile’s by a bigger amount. The Chilean rate has already fallen 350 bps since the start of 2009.
Euroland producer prices fell 0.8% in January. Its 12-month pace swung into the red by 0.5% versus a gain of 6.2% on year as recently as October. Producer prices were 2.6% below their 4Q08 average level.
India’s industrial production fell 0.5% in January following a 0.6% drop in December, the first set of consecutive declines in 16 years.
French consumer prices rose 0.4% m/m and 1.0% y/y in February. The drop in French jobs last quarter was revised to 0.7% from 0.6%.
According to a quarterly Bank of England survey, expected one-year British CPI inflation subsided to 2.1% in February from 2.8% in November. The U.K. index of leading economic indicators fell 0.4 points in January and by 2.3 points (or 2.4%) in the latest three reported months. British construction orders plunged 12% in January and by 32% from a year earlier.
Italian growth last quarter got revised to minus 1.9% from minus 1.8% reported initially. GDP fell 2.9% in the year to 4Q08. The German IFW Institute is now projected even weaker growth in 2009 of negative 3.7%, revised down a percentage point from its end-of-2008 estimate.
Consumer prices in Spain were unchanged month-on-month and up 0.7% on year in February. Sweden’s CPI similarly was flat that month and up 0.9% from February 2008.
U.S. Secretary Geithner is urging officials from other advanced economies to be more tolerant of Chinese foreign exchange policy.
Polish industrial production fell by a smaller-than-expected 10% in the year to February.
U.S. retail sales and jobless claims get reported at 13:30 GMT.
Copyright 2009 Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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