Big Day for Central Banks But Watching Greece Too

February 9, 2012

The Bank of England’s Monetary Policy Committee expanded quantitative easing as many thought it would.  The Asset Purchase Program’s ceiling was raised to GBP 325 billion from GBP 285 billion.  This extension is expected to take three months to complete.  The Bank rate was held steady at 0.5%.

The European Central Bank will announce its interest rate decision at 12:45 GMT.  A press conference follows at 13:30 GMT.

The Bank of Korea left its seven-day repo rate unchanged at 3.25% as expected.

Bank Indonesia unexpectedly reduced its benchmark interest rate by 25 basis points to 5.75%.  This easing follows cuts of 50 bps in November and 25 bps in October.  The rate had been at 6.75% from February until October of last year.

No new substantial breakthroughs in Greek debt talks were reported overnight.

Dollar overnight changes have been confined to a gain of 0.2% against the yen and 0.1% versus the loonie, Swissie, and Aussie dollar and drops of 0.3% against sterling and 0.1% relative to the yuan and kiwi.  EUR/USD is unchanged.

European share prices are up 0.5% in Germany and 0.3% in France and Britain.  Equities were unchanged in Hong Kong and China, down 0.8% in The Philippines and 0.2% in Australia, Japan, and Indonesia, and up 0.7% in India and by 0.5% in Taiwan and South Korea.

Ten-year German bund and British gilt yields dipped by one and two basis points, while the comparable JGB yield is flat.

Oil and gold prices increased 0.6% and 0.2% to $99.33 per barrel and $1734.90 per ounce.

Japanese core machinery orders, a leading index of business investment, fell 7.1% in December after leaping 14.8% in November.  Such declined 2.8% last quarter, a bit less than expected, and are projected to rise 2.3% in 1Q12.  Foreign machinery orders rose 5.6% in December and by 12.6% from a year earlier.  Such increased 8.8% in the fourth quarter and are projected to climb by even more this quarter.

Stock and bond transactions generated a JPY 692 billion capital inflow from Japan last week following a JPY 1.5 trillion outflow in the prior week.

Japanese consumer confidence increased 1.1 points to an 11-month high of 40.0 in January, prompting officials to upgrade the assessment of household sentiment.  Japanese M3, M2, M1 and broad liquidity posted on-year increases of 3.0%, 2.6%, 5.0% and 0.4% in January.  Weak growth in the money stock and bank lending have been hallmarks of the Japanese economy for the past two decades.

Chinese consumer and producer price data for January were reported.  The big surprise was an acceleration of the CPI to a 12-month 4.5% pace from 4.1% in December.  This first increase since July’s peak of 6.5% reflected a 1.5% on-month jump.  The PPI, in contrast, slowed to 0.7% on year from 1.7% in December and a 2011 high of 7.5% in July.

British trade and industrial production figures were published.  The goods and services deficit totaled GBP 1.109 billion in December, 61% narrower than in November on a 4.6% plunge in imports together with a 0.9% rise of exports.  The merchandise goods trade shortfall narrowed to GBP 7.1 billion from GBP 8.9 billion in November, but the 2011 deficit of GBP 99.3 billion slightly exceeded the 2010 deficit of GBP 98.5 billion.  Industrial production rose 0.5% in December but fell by 1.4% in the fourth quarter.  The on-year declines were 3.3% in December, 3.2% in the fourth quarter, and 1.3% in 2011.

Greek industrial output recorded an 11.3% plunge between December 2010 and December 2011.  The Greek jobless rate moved above 20% for the first time to 20.9% in November.  Greek CPI inflation slowed to a 5-month low of 2.3% in January.  Dutch CPI inflation ticked 0.1 percentage point higher to 2.5% in January.  German insolvencies were 5.4% lower than a year before in January-November.

South Korean PPI inflation slowed to 3.4% in January from 4.3% in December.  Malaysian industrial production rose 3.5% in December and 3.0% from a year earlier.  South African factory production dipped 1.3% in December and was just 2.4% greater than a year earlier.

Scheduled North American data today include U.S. wholesale turnover and inventories, Mexican producer and consumer prices, and Canadian home prices.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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