Data Deluge on First Day of Third Quarter

July 1, 2011

The dollar edged up 0.1% against the euro and is trading below 1.45/EUR after touching an overnight low of $1.4553.  The euro’s high in June was $1.4696.

Greece has averted a default for now with the positive austerity votes of Wednesday and Thursday.  The Swiss franc has dropped 0.6% against the dollar and 0.5% against the euro on lessening risk aversion in response. 

The dollar has also risen 0.4% against the kiwi, 0.3% relative to the yen, 0.2% versus sterling and 0.1% against the Aussie dollar.  The Canadian and Chinese currencies are unchanged against the greenback.

Canada will be closed for Canada DayHong Kong was closed also to observe the 14th anniversary of the transfer of its sovereignty to China from Britain.  Ironically, July 1, 1997 also marked the beginning of the Asian financial crisis when the Thai bhat devalued that day.

The 10-year German bund, British gilt and Japanese JGB yields are unchanged at 3.02%, 3.38%, and 1.14%.

Stocks rose 1.4% in The Philippines, 1.2% in South Korea, 1.0% in Indonesia and Taiwan, 0.8% in Thailand and New Zealand, 0.6% in Singapore, and 0.5% in Japan.  Losses of 0.4% were scored in India and Australia.  In Europe, the British Ftse, German Dax and Paris Cac show modest gains of 0.5%, 0.2%, and 0.1%.

The quarterly Bank of Japan corporate survey results were released.  The index for big manufacturing conditions worsened more than expected from +6 in March to minus 9 in June.  The big non-manufacturing index swung from +3 to minus 5.  For all 10997 firms in the survey, the index deteriorated by nine points to minus 18.  The news was not all bad, however.  These results are not as low as in other recent recessions.  Large-sized companies expect improvement by September, and projected sales, earnings, and planned investment for the current fiscal year were revised upward.  Inventories and product supplies are less excessive.

In other Japanese data released today,

  • The jobless rate fell to 4.5% in May from 4.7% in April, while the job offers ratio held steady at 0.61.  Employment was 0.1% greater than a year earlier.
  • Consumer prices were unchanged on month in seasonally adjusted terms for May and up 0.3% on year.  Core CPI inflation of 0.6% was the same as in April but higher than forecast.  Core-core CPI inflation (excluding energy as well as seasonal foods) flipped to +0.1% from minus 0.1%.  Tokyo core CPI was 0.1% as well.
  • Real household spending posted a 1.9% on-year decline in May, similar to what analysts were predicting.  Real disposable incomes were 3.6% below a year earlier.
  • Motor vehicle sales in June were a whopping 23% lower than a year before.  A weak trend was amplified by earthquake-related supply disruptions.

U.S. Treasury Secretary Geithner is reportedly thinking of returning to the private sector once the debt ceiling issue is resolved.  Geithner is the last of President Obama’s original top economic policy appointees.  In a startling development, it seems that the rape allegations against former IMF chief Strauss-Kahn may have been a fabrication.  The prosecutor’s case is said to be full of holes.

A slew of manufacturing purchasing manager survey results for June has been mostly disappointing.  Growth has slowed, and high commodity and other input costs seem to be a key culprit.

  • China’s official index fell to 50.9 from 52.0 in May and 53.4 in April.  The HSBC Chinese PMI dropped to an 11-month low of 50.1 from 51.6.
  • South Korea’s PMI was barely above the no-change threshold of 50, printing at 51.1 after 51.2 in May, 51.7 in April and 53.9 at end-2010.
  • India’s index fell to a 9-month low of 55.3 from 57.5 in May.
  • Taiwan’s index of 49.9 was below 50.0 for the first time since October and sharply below readings of 54.9 in May and 58.2 in April.
  • Russia’s index edged down a tenth to 50.6, lowest since March 2010.
  • The Swiss index sank to 53.4 from 59.2 in May and was well below forecasts of 57.8.
  • Sweden’s PMI dropped 3.2 points to 52.9.
  • Poland’s PMI fell 1.4 points to 51.2 and was the worst reading since January 2010.
  • Turkey’s index (52.3) recovered from an 8-month low in May of 50.6 but was below April’s 52.7 and a record 58.5 as recently as February.
  • The Czech PMI of 55.1 was down from 55.9 in May and 59.0 in April and the weakest Czech score since February 2010.
  • Hungary posted a 54.4 reading, which fell in between April’s 56.9 and May’s 52.4.
  • The euro area purchasing managers index for manufacturing was 52.0, same as the preliminary reading and down from 54.6 in May and 58.0 in April.
  • Within Euroland, the French index of 52.5 also matched the flash reading and was at its lowest level since August 2009.  Italy’s index dipped under 50 to 49.9 from 52.8 in May and 59.0 as recently as February.  The German index was revised downward to 54.6 and continued the slowdown from 62.0 in April to 57.7 in May.  Greece remained in deep recession with a 45.5 reading versus an average score of 45.57 in the three prior months.  Spain’s PMI worsened to a 47.3 from 48.2 in May, 50.6 in April, 51.6 in March and 52.1 in February. Irish manufacturing conditions showed outright contraction for the first time since last September with a reading of 49.8 after 51.8 in May and 56.0 in April.  Both the production and orders sub-components of the Irish survey, respectively at 49.3 and 48.7, connoted shrinkage as well.  The Dutch PMI score of 52.1 after 55.1 in May and 59.2 in April showed slowing expansion. 
  • Norway’s PMI was 56.1 in June, down from 56.8 in May.
  • The Danish PMI improved to 62.5 from 58.2, a rare bright spot in today’s PMI reports.
  • Britain’s PMI moved closer to 50 with a reading of 51.3 after 52.0 in May, 54.4 in April, 56.7 in March, 61.2 in February and 61.5 at the start of 2011.

Australia’s June PSI manufacturing index provided another upbeat note, rising to 52.9 from sub-50 readings in each of the prior three months and five of the six months since December.  New home sales in Australia slid 0.2% in May, ending four consecutive increases.  Australian commodity prices advanced by 1.3% on month and 28% on year in SDR terms and by 2.2% on month and 12% on year in local currency terms.

Unemployment in the euro area held steady at 9.9% for a third straight time in May and was down from 10.1% in May 2010.  Jobless rates ranged from 4.2% in The Netherlands to 20.9% in Spain. 

Danish retail sales fell 1.0% in May and by 2.4% from a year earlier.

Indonesian consumer prices rose 0.6% in June and by 5.5% from a year earlier, remaining below the target ceiling of 6%.  Indonesia’s trade surplus doubled to $3.5 billion in May from $1.6 billion in April.  India posted a $15 billion trade gap in May.

Poland assumed the rotating EU presidency today and will hold that role until December 31.

Scheduled U.S. data today feature the manufacturing purchasing managers survey, the U. Michigan consumer sentiment index, construction spending, and motor vehicle sales.  The Treasury market will shut early for the three-day Independence Day holiday weekend.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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