Better Market Tone

September 7, 2011

The Swiss franc remains weaker than 1.20 per euro at 1.2067.

The dollar is generally softer especially versus commodity-sensitive currencies.

Gold dropped 2.4% to $1828.7.  Oil rose 1.2% to $87.26.

Ten-year bund and gilt yields are five basis points higher.

Equities recovered 2.0% in Japan, 2.1% in China, 2.2% in Taiwan, 2.9% in Indonesia, and 2.7% in Australia.  The German Dax is 3.1% stronger after a ruling by the constitutional court and the release of German industrial production data.  The Paris Cac and British Ftse advanced 2.3% and 1.8%.

Germany’s high court accepted the legality of the Greek bailout using ESEF funds.  The vote was close, and the court cautioned that its decision is not necessarily a blueprint for future bailouts.

German industrial output jumped 4.0% in July and 10.1% on year in July.

The Bank of Canada left its overnight target rate at 1.0% as expected.

The Swedish Riksbank left its repo rate unchanged at 2.0% and reduced projected future policy rate levels by about a half-percentage point compared to its estimates made in July.

The Bank of Japan announced no further easing moves at this time, but Governor Shirakawa’s remarks were dovish.

Australian GDP growth of 1.2% last quarter exceeded expectations despite a 0.5 percentage point drag from net exports.  On-year growth accelerated to 1.4% from 1.0% in 1Q.  Australia’s construction index slid to 32.1 in August from a reading of 36.1 in July.  It was the weakest score since March 2009.

British industrial output surprisingly fell 0.2% in July and by 0.7% on year.  Shop prices in August according to the British Retail Consortium were 2.7% higher than a year earlier.  The Halifax house price index fell 1.2% in August, four times more steeply than expected, and was 2.6% lower than a year before.

Greek consumer prices slumped 1.4% in August and to a 12-month increase of 1.7% versus 2.4% in July.

Japan’s index of leading economic indicators improved 2.8 points to 106.0 in July.  The coincident index rose by 0.2 to 109.0.

Danish industrial production growth of 2.7% in July far surpassed expectations.  Industrial production in Hungary rose 0.8% but just 0.3% on year.  In Norway, industrial production and factory output were 4.3% and 5.0% lower in July than a year earlier.

U.S. mortgage applications fell for a third straight week, dropping 4.9% last week.  The 30-year fixed rate mortgage rate last week of 4.23% was 9 basis points lower than in the prior week.  The Fed’s Evans speaks later today, and the Labor Department releases the JOLTS index.

Tomorrow’s focus will be the policy decisions of the Bank of England and ECB.

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

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