Spotlight on Bernanke Speech at 14:00 GMT (08:00 Local Time)

August 26, 2011

Investors await Fed Chairman Ben Bernanke’s breakfast speech at the Jackson Hole Annual Symposium.  He’s not expected to announce a major policy initiative.  Revised U.S. GDP 2Q data are due at 12:30 GMT, with the consensus being that growth will get revised down from the preliminary estimate of 1.3% to 1.0% or less.  The U. Michigan final August figure on consumer sentiment also arrives today.

Equities are mostly lower in Europe and Asia.  The German Dax lost 1.9% in continuing response to an extended ban on short selling in some European peripherals.  Stocks dropped 1.4% in Malaysia, 1.8% in India, 0.9% in Hong Kong, 0.6% in Singapore, 0.3% in Australia, and 0.1% in China and Indonesia.  The Paris Cac and British Ftse have traded 0.7% and 0.6% lower.

The dollar has depreciated 0.7% against the Japanese, New Zealand, and Australian currencies.  It is down 0.2% against sterling and off 0.1% relative to the Canadian dollar and yuan but shows a 0.2% gain against the Swissie.

The ten-year British gilt yield firmed two basis points, while yields are unchanged on Japanese JGBs and German bunds.

Gold rebounded sharply, gaining 1.4% to $1788 per ounce.  Oil advanced 0.5% to $84.87 per barrel.

Reserve Bank Governor Stevens in semi-annual parliamentary testimony projected above-trend inflation this quarter but a downtrend thereafter.  He said that inflation remains manageable and that greater external risks could be a dampening factor.  The gist of his remarks is that monetary policymakers for now will hold their fire and likely keep the Official Cash Rate at 4.75%.

The Bank of Mexico has a policy meeting today and is not expected to tighten.  There was an act of drug-related terrorism in Monterrey overnight.  An arson fire at a casino killed at least 40 people.

Japanese Prime Minister Kan as expected resigned as party leader after the passage of some key bills.  Lawmakers will choose a new prime minister on Tuesday.

Japanese consumer prices in July rose 0.3% seasonally adjusted and were 0.2% higher than a year earlier.  The core inflation rate of minus 0.1% was 0.2 percentage points less than expected.  Excluding seasonal food and energy, the CPI was 0.5% lower than in July 2010.  Tokyo consumer prices in August recorded a seasonally adjusted 0.2% on-month decline and was 0.2% lower than a year before.  The core Tokyo inflation rate of minus 0.2% fell below zero for the first time in five months.

German import price inflation in July exceeded expectations, advancing 0.8% on month and accelerating to a 7.5% 12-month rate of increase from 6.5% in June.  The on-year increase was 4.3% excluding oil products, up from 4.0% the month before.  Export prices increased 0.3% in July and by 3.7% on year.

Euroland money and credit growth last month were slightly lower than anticipated.  M3 rose 2.0% on year and by 2.1% for May-July.  Private credit and private loans recorded marginally slower on-year increases of 2.5% and 2.4%.  M1 growth slowed to 0.9% from 1.2%.  Although money growth has continued to be subdued, ECB officials have boosted their key rates twice, noting that the levels of M3 and lending are amply high due to prior strong expansion.

The second estimate of British 2Q GDP growth was unrevised at 0.2% from 1Q.  On-year growth slowed to 0.7% from 1.6% in the year to 1Q.  The U.K. monthly services index slipped 0.1% in June.

Sweden’s trade surplus widened sharply to NOK 12.2 billion in July from NOK 7.7 billion in June and NOK 9.4 billion a year ago.  Turkey’s trade deficit narrowed 11.7% to $9.0 billion in July.

A second estimate of Spanish GDP growth in 2Q (up 0.2% from 1Q and 0.7% on year) was unrevised.  GDP had increased 0.9% between 1Q10 and 1Q11.

The Swiss KOF index of leading economic indicators recorded its largest month-on-month deterioration in about two years, dropping to 1.61 from a downwardly revised 1.98 in July.  Swiss officials are in an all-out fight to reverse some of the franc’s massive appreciation earlier this year.

Industrial production in Singapore grew 0.3% in July and by a smaller 7.4% on year after advancing 10.7% between June 2010 and June 2011.

Hurricane Irene at 09:00 GMT was some 400 miles to the south and southwest of Cape Hatteras, North Carolina with somewhat diminished winds of 110 MPH.  It may reintensify to a Cat 3 storm and make landfall Sunday somewhere around NYC or CT.

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

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