Politicians Won’t Risk Not Reconfirming Bernanke

January 25, 2010

The dollar and yen are slightly lower in a sign of somewhat receding risk aversion, but stocks still look shaky.  Congress took a look at the stock market bloodbath last week and decided not to kill Bernanke’s reappointment at Fed Chairman.

The yen fell 0.4% against the dollar, which is otherwise off 0.8% against the Australian dollar, 0.6% lower versus the kiwi, down 0.4% against the Swiss franc, and 0.3% softer relative to the Canadian dollar, euro and sterling.

Most Asian stocks nonetheless lost ground, with drops of 0.7% in Japan, Taiwan and Australia, 1.1% in China, 0.6% in Hong Kong, and 0.5% in Thailand, Indonesia and India.  The German Dax is off 0.2%, while the British and French markets have firmed 0.4% and 0.2%.

Ten-year sovereign debt yields edged one basis point higher in Japan, Britain, and Germany.

Gold and oil recovered 1.1% and 0.4% to $1103.70 per ounce and $74.82 per barrel.

Australian producer prices fell 0.4% last quarter and 1.5% from a year earlier.  That evidence of significantly less inflationary pressure than assumed reduces the chance of a fourth Australian rate hike after the February policy meeting.  Import prices plunged another 5.1% last quarter and by 12.0% from a year before.  Such had risen 6.5% in the year to 3Q09 and by 20.3% in the year to 2Q09.  Domestic producer prices firmed 0.3% from 3Q and merely 0.2% from a year earlier.

German orders were substantially under-reported when announced earlier this month, resulting in a corrected release of Euroland orders for November.  The German component of the original Euroland release had shown a 0.7% monthly increase but a 1.5% on-year drop.  The revised monthly gain for Germany is 3.2%, and the data also show an on-year increase of 0.9%. For Euroland as a whole, orders went up 2.7% in November, not 1.6% as reported initially, and fell 0.5% from November 2008, 1.0 percentage point less than announced initially.  Euroland orders in October-November were thus 0.5% above their 3Q level, signaling continuing economic recovery last quarter and some momentum heading into 2010.

German consumer sentiment eased to 3.2% in February from an upwardly revised reading of 3.4% the month before.  Analysts had predicted a 3.1% score.  German construction orders in November were 0.5% higher than a year earlier.

Reuters calculates monthly diffusion indices for Japanese manufacturing and non-manufacturing, which serve as proxies for the Bank of Japan’s Tankan data series.  Each gauge improved in January, manufacturing by 8 points to a 16-month high of minus 19 and non-manufacturing by five points to minus 34.  Other reports from Japan were more unsettling.  The central bank there is not expected to change policy after this week’s two-day meeting but reportedly is prepared to undertake more quantitative easing if future conditions warrant.  Public debt per person in Japan is likely to reach $84,500 by March 2011.

Taiwanese industrial production growth accelerated to an on-year increase of 47.3% in December from 40.9% in November.

Hungarian retail sales in November were 7.8% lower than a year earlier and dropped by 5.0% in January-November from a year before.

Producer prices in Spain edged up 0.1% in December and 0.4% from a year earlier.

The Canadian budget swung to a deficit of C$ 36.3 billion in April – November (the first eight months of the present fiscal year) from a surplus of C$ 39 billion a year earlier.

Consumer prices in Singapore were unchanged from a year before in December and fell 0.5% compared to November.  The results were lower than forecast and left full-2009 average CPI inflation at merely 0.2% after a pace of 6.5% in 2008.

Israel and Hungary announce interest rate decisions later today.  The Bank of Japan began a two-day policy meeting.  Scheduled U.S. economic data today feature existing home sales and the Dallas Fed index.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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