Stocks, Bond Yields and Commodities Higher, Dollar Lower

November 18, 2010

The dollar lost 1.0% against the euro and Australian dollar, 0.9% against the kiwi, 0.7% versus the Canadian dollar, 0.6% relative to the Swiss franc and 0.5% versus sterling.  The dollar is steady against the yuan and yen.

The Japanese Nikkei advanced 2.1% and closed above 10,000 for the first time since June 22.  Equities gained 1.5% in Thailand, 1.4% in Sri Lanka and China, 1.8% in Hong Kong, 1.3% in the Philippines, but just 0.3% in India.  In European markets, stocks have recovered 1.3% in Spain and Britain, 1.4% in Germany, and 1.6% in France.

An EU-led bailout for Ireland worth “tens of billions of euros” is very near according to Irish officials.  Ten-year sovereign bond yields climbed seven basis points in Germany, eight basis points in Britain, and six basis points in Japan.  Treasury futures show a similar direction.

Oil and gold prices advanced 1.6% to $81.74 per barrel and 1.5% to $1356.50 per ounce.

The Filipino central bank left its reverse repo and repo rates steady at 4% and 6%, citing lower inflation and projected in-target inflation.

The OECD released a new “Economic Outlook,” revising world growth for next year to 4.2% from 4.5% predicted six months ago.  U.S. growth is projected at 2.2% in 2011 followed by 3.1% in 2012.  Japanese growth slows to 1.7% in 2011 and 1.3% in 2012.  The euro area also is expected to expand 1.7% next year and then by 2.0% in 2012.  Britain is assigned the same growth rates as Euroland, and Canada’s projected growth of 2.3% in 2011 and 3.0% in 2012 is very similar to the projected U.S. rates.  Australia will be running ahead of the G7, expanding by 3.6% next year and 4.0% in 2012.

Euroland’s current account sunk to a seasonally adjusted EUR 13.1 billion deficit in September, the largest shortfall of 2010, from EUR 6.9 billion in August.  The unadjusted deficit over the twelve months to September of EUR 48.7 billion was 45.6% smaller than a year earlier, however.

British retail sales volume advanced 0.5% last month, reversing a 0.5% drop in September, but was still 0.1% lower than in October 2009.  Sales in the three months to October were just 0.1% higher than in the previous three months.  Britain recorded a GBP 10.3 billion of public sector net borrowings in October, which was somewhat greater than expected.  The public sector net cash requirement narrowed to GBP 2.4 billion from GBP 6.7 billion in October 2009, however.

A less negative reading on export demand resulted in a sharper-than-anticipated rebound of the U.K. CBI industrial trends index to minus 15 in November from minus 28 in October.  The Bank of England confirmed that British mortgage approvals totaled 44K last month.

Investor sentiment toward Switzerland worsened to a reading of minus 30.9 on the ZEW index from minus 27.5 last month.  Switzerland’s trade surplus widened in October to CHF 2.1 billion as a 6.2% gain in exports outdistanced a 1.9% increase of imports.  Dutch consumer confidence was stronger than expected in November, but the reading of minus 7 was still below zero.  Swedish unemployment was at 7.5% last month. 

On-year Singapore GDP growth settled back to 10.6% in the third quarter from 19.6% in the second quarter.  Officials expect full-2010 growth of 15% followed by 4-6% in 2011.  Taiwanese GDP growth also slowed to 9.8% on year from 12.9% in 2Q.  Taiwan growth is expected to run 10% in 2010 but slow to 4.5% in 2011.  The OECD warned that monetary policy in Hong Kong, which is subordinated to Fed policy in order to preserve the HKD/USD parity rate of 7.78, could lead to asset bubbles in the former British colony.

South Korean department store sales were 13.3% higher than a year earlier in October.  Food price inflation in India slowed to an on-year 10.3% pace in the first week of November.

New Zealand producer output prices rose 1.2% last quarter, twice as sharply as projected, and by 4.0% from a year earlier.  Producer input prices went up 0.7% on quarter and by 3.8% from 3Q09.  New Zealand’s capital goods price index increased 0.4% in the third quarter and by just 0.2% on year.  Consumer confidence in New Zealand improved further to 114.5 in November from 113.5 in October.

Deputy Governor Battelino of the Reserve Bank of Australia defended this month’s 25-bp rate hike to 4.75% as a prudent move to contain inflation down the road.

Scheduled U.S. data today feature the index of leading economic indicators, the Philly Fed manufacturing index and weekly jobless insurance claims.  Canada will be reporting its index of leading economic indicators, wholesale sales, and international transactions.  A slew of central bankers speak publicly including Trichet, Mersch, Bini-Smaghi, Gonzalez-Paramo of the ECB, Plosser and Kocherlakota of the Fed and Tucker and Posen of the Bank of England.

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

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2 Responses to “Stocks, Bond Yields and Commodities Higher, Dollar Lower”

  1. hifamily says:

    what a wonderful post but l have one or more question to ask- what is GMT time and your articles are they forecast or what that had happened to the currencies? am new to forex just few weeks ago, love to know how to trade with fundamental. thanks

  2. larrygreenberg says:

    GMT means Greenwich Mean Time.

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