New Overnight Developments Abroad: Softer Yen
May 28, 2009
The dollar advanced 1.7% against the yen but weakened by 1.5% against the kiwi, 0.8% relative to the Australian dollar, 0.2% against the Canadian dollar, and 0.1% each against the euro and Swissy. The pound is 0.2% lower against the dollar.
Markets were closed in China, Hong Kong and Taiwan.
The Nikkei firmed 0.1% but most other stock markets are weaker: Australia -1.2%, New Zealand -1.7%, Vietnam -2.3%, Germany -1.3%, France -1.1% and Britain minus 1.1%.
The 10-year Treasury yield of 3.73% is up another 3 basis points and 28 basis points above its pre-Memorial Day weekend close. The 10-year JGB firmed 1 bp to 1.49% after touching a 6-month high of 1.5%. Japan’s 2-year auction went about as expected.
Oil is steady but high at $63.41 per barrel, having gained about $30 since mid-February lows, and gold slid 0.5% to $950.20 per ounce.
A fairly restrictive New Zealand budget eliminated tax cuts that had been planned, forecast growth of negative 1.7% this fiscal year and +1.8% next, and forecast comparatively contained debt of 15.6% of GDP this fiscal year. S&P in reaction shifted the outlook on New Zealand debt to “stable” from “negative.”
Australian investment tumbled 8.9% last quarter, more than assumed.
Japanese large-store retail sales fell 6.7% in the year to April, almost as much as the 7.2% on-year drop in the first quarter. Total retail sales firmed 0.6% on month and posted a smaller-than-forecast 12-month decline of 2.9% following a 3.9% decline in the year to 1Q09. Stock and bond transactions generated a Y981 billion outflow last week.
In Euroland, overall economic sentiment rose to 69.3 in May from 67.2 in April and 64.7 in March, but consumer confidence and construction sector sentiment were unchanged at -31 and -34. Industrial business sentiment slid a point to 34. The main improvement came in retail (minus 16 after -20). Services rose another point after an 11-point advance in April. The sentiment indices were associated with increasingly deflationary price expectations among firms and consumers.
Bloomberg released its retail PMI scores for Euroland, showing a disappointing 1.3-point decline to 47.1 in May for the bloc as a whole.
Better-than-forecast German labor statistics reflected an accounting change in part. Unemployment rose just 1K, and the jobless rate eased back to 8.2% from 8.3%. However, real plant and equipment orders were reported to have plunged by a record 58% in the year to April, a sign that the recession still has life.
Italian business sentiment advanced to a 6-month high and better-than-forecast 68.7 from 65.5.
Swedish retail sales jumped 3.5% and 5.0% on year in April. Very small increases had been expected. Swedish producer price inflation slowed to 3.2% in April from 4.8% y/y in March. Danish business sentiment among manufacturers improved by ten points to -23 in May.
Norwegian unemployment of 2.6% in May was lower than assumed, but the government released downwardly revised price and growth projections.
The Philippines had a horrific 2.3% quarterly decline in real GDP during 1Q09, cutting on-year growth to 0.4% from 2.9% in 4Q08 and prompting the central bank to cut its key borrowing and lending rates by an as-expected 25 basis points to 4.25% and 6.25%. More easing in the future is probable.
Sentiment among South Korean manufacturers jumped sharply to 110 in June from 66 in March. another large current account surplus of $6.5 billion was reported for April.
South African producer price inflation tumbled to 2.9% y/y in April from 5.3% in March. M3 growth slowed to an 8+-year low of 8.8% from 10.6%. A 100-bp rate cut in South Africa seems likely later today.
French housing starts fell 22.6% in the year to February-April.
In Britain, the CBI survey of retailers showed a relapse in the distributive trades index to minus 17 in May from +3 in April and indicated expectations of a minus 20 reading in June. These are still better than negative scores of -44 in March and -55 in December.
Belgian consumer prices recorded a negative 12-month pace in May (-0.4%) for the first time since end-1960. Spanish consumer price inflation of minus 0.8% in May was also negative in May. The Swiss trade surplus widened 62% to Chf 2.56 billion between April 2008 and April 2009. Portuguese business sentiment improved a half-point to -2.5 in May. Consumer confidence in that country also went up. As elsewhere in the euro area, data trends are stabilizing but as still very weak levels.
U.S. data today include weekly jobless claims and energy stocks and monthly durable goods orders and new home sales. The monthly KC Fed index arrives too, and Dallas Fed President Fisher will be speaking.
Copyright 2009 Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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