Last Weekend of May

May 28, 2010

Yesterday’s better market tone is holding.  The U.S. and British markets will be closed Monday for Memorial Day and a Banking Holiday.

The euro strengthened 0.4% against the dollar.  The U.S. currency otherwise has dipped 0.2% against the Canadian dollar and Swiss franc, risen 0.2% against the kiwi and by 0.1% against the yen, and shows no change versus sterling or the Australian dollar.

A former advisor to China’s central bank said reserve diversification ought to continue.

Stocks rose 1.3% in Japan, 1.8% in Australia, 1.7% in Hong Kong, 1.2% in India, 1.0% in South Korea, 0.7% in Taiwan, and 0.4% in New Zealand.  In Europe, the Ftse has advanced 0.8%, and the Paris Cac and German Dax are 0.4% firmer.

Ten-year German bund and Japanese JGB yields are unchanged.  The 10-year gilt yield slid two basis points.

Oil prices recovered 1.2% further to $75.41 per barrel.  Gold edged up 0.2% to $1216.40 per ounce.

Several Japanese statistics were released, and they were a bit disappointing.

  • The jobless rate rose to 5.1% in April, highest since December.  Employment was 0.8% lower than a year earlier, and the job offers ratio settled back to 0.48 from 0.49 in March.  This was the first dip of the ratio since it bottomed out at 0.43 in November.
  • Real household spending dropped 6.3% on month in April and posted an on-year decline of 0.7% after rising 4.4% in the year to March.  However, real disposable income was 1.6% higher than a year earlier.
  • April was Japan’s most deflationary month in over a year.  Core CPI (excluding seasonal food only) inflation worsened to minus 1.5% from minus 1.2% in March and February.  Non-food, non-energy CPI inflation was minus 1.6% after minus 1.1% in the prior two months.  Total CPI was minus 1.2% after minus 1.1% in the previous two months.  The three measures in seasonally adjusted terms recorded drops from March of 0.5%, 0.6%, and 0.3% in April.
  • Seasonally adjusted Tokyo consumer prices fell 0.3% on month for both all items and for the non-food and non-energy index.
  • Large-store retail sales were 3.6% lower in April than a year earlier, which was less than a 4.9% on-year decline in 1Q10.  Total retail sales also improved with on-year growth of 4.9% versus 3.8% in the year to 1Q10.

German import price inflation accelerated to 7.9% in April, most since August 2008, from 5.0% in March and 2.6% in February.  There was an on-month increase of 2.0%.  Import prices excluding oil products rose 1.4% on month but only 3.3% on year.  Export price inflation of 3.0% on year was the highest since November 2000.

Switzerland’s index of leading economic indicators improved more than forecast to 2.16 in May from 2.05 in April.  The Swiss trade surplus widened 18.8% to Chf 2.02 billion last month, as exports increased 3.1% while imports went up by a lesser 0.8%.

Swedish GDP rose 1.4% last quarter and by 3.0% from the first quarter of 2009.  Consumption and inventories powered the increase.  Investment fell, and imports grew marginally faster than exports.  Swedish retail sales in April dipped 0.2% on month and by 1.2% on year.  Household loans were 9.2% greater in April than a year earlier.

Belgian consumer prices firmed 0.4% in May and accelerated to a 12-month rise of 2.3% from 1.8% in April.  Spanish CPI inflation of 1.8% in May was a bit above expectations.  Italian producer prices jumped 1.2% on month in April and rose to a 12-month pace of 3.2% from 1.7%.  Factory wages in Norway rose 0.8% last quarter, same as in the final quarter of 2009.  Norwegian unemployment of 3.5% matched forecasts.

British consumer confidence measured by GFK printed at a disappointing minus 18 in May after minus 16 in April.

NYU Professor Roubini said Greece was only the tip of the European debt problem.  There have been some street protests in France against proposed pension reforms.  Portuguese consumer confidence weakened to minus 38.3 in May from minus 36.7 in April.

Colombia’s central bank retained a 3.0% key interest rate after April’s unexpected cut of 50 basis points.

New Zealand M3 was 3.6% lower in April than a year earlier.  New Zealand building permits leaped 8.5% in April, a great harbinger of future housing market activity.

Chinese industrial profits in the year to April exceeded their year-earlier level by 91.5%.

Ahead of the three-day Memorial Day weekend, the start of the summer foreign exchange trading season, the United States will releases personal income and spending.  The U. Michigan consumer sentiment index, Chicago PMI, and NAPM index also arrive.  So do figures on the Canadian current account last quarter.

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

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