New Overnight Developments Abroad: Gold Soars

December 2, 2009

Gold jumped to a new record $1217.23 per troy ounce and is up 1.1% on balance.  Oil is down 0.8% at $77.77 per barrel, in contrast.

Dollar/yen rose 0.6% amid forceful verbal intervention.

  • BOJ officials Suda warned of damage to business and consumer confidence from strong yen.
  • Prime Minister Hatoyama asserted something has to be done about yen strength.
  • Financial Services Minister Kamei urged coordinated intervention to weaken Japan’s currency.

Kamei is unlikely to get international cooperation.  Plosser of the Fed and Canadian Finance Minister Flaherty respectively indicated a lack of concern about the softer dollar and inclination not to intervene now.

Otherwise the dollar is unchanged against the euro, Swissy, and Canadian dollar, down 0.3% against sterling, off 0.2% versus the Aussie dollar, and 0.1% lower against the kiwi.

Stocks rose by 1.0% in China, 0.4% in Japan, 0.9% in Australian and Singapore, 1.3% in Sri Lanka, and 1.4% in South Korea.  But in Europe, the German Dax and British Ftse are off 0.2%, while the Paris Cac is 0.1% lower.

Ten-year JGB, gilt, and bund yields have advanced six, four, and three basis points.

As expected, the Bank of Thailand left its 1-day repo rate steady at a five-year low of 1.25%, where such has been since April.

According to November Tankan indices calculated by Reuters, Japan‘s manufacturing sector continues to improve with a reading of minus 28 after minus 35 in October and minus 42 in August, whereas non-manufacturing slid to minus 35 from minus 33 in October.  Japan’s monetary base grew just 3.8% in the year to November, down from on-year growth of 4.4% in October, 5.6% in 3Q, and 7.5% in 2Q.  Government officials want the Bank of Japan to do more about combating deflation.

The British construction PMI printed at 47.0, a hair above forecasts and better than October’s 46.0 reading.  Yesterday’s manufacturing PMI report was significantly weaker than hoped.

Producer prices in Euroland firmed 0.2% in October, somewhat more than forecast.  On-year PPI deflation was minus 6.7% after minus 7.6% in September.  The energy component continues to move erratically with a monthly rise of 1.0% after falling 1.6% in September, rising 1.7% in August, plunging 2.7% in July and climbing 1.6% in June.  Non-energy producer price inflation is steady and subdued.  Such slid 0.1% in October and fell 3.9% from a year earlier.

German real machinery and equipment orders sank 29% in the year to October, less than the 35% on-year drop in August-October.

Sweden‘s third-quarter current account surplus was 14% narrower than a year earlier.

South African motor vehicle sales posted their smallest on-year drop in November (off 12.1%) in 19 months.  Consumer confidence rose to a near two-year high.

Brazilian industrial output rose 2.2% in October on top of a 1.8% advance in September but was still 3.2% lower than a year earlier.

President Obama confirmed plans to boost U.S. troops in Afghanistan but also imposed a mid-2011 deadline on when troop withdrawals are to begin.

The U.S. data watch turns to the politically sensitive jobs market.  ADP reports private jobs today, followed by weekly jobless claims and the monthly labor force survey from the Labor Department on Thursday and Friday, respectively.  Opinions differ on how high unemployment goes.  All year, I’ve thought we ought to at least reach the post-war prior peak of 10.8% seen in late 1982 and have not changed that view, even though joblessness seems to have crested in Euroland just shy of 10%.

The Fed releases its Beige Book on regional economic conditions later today.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.

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