Partial Correction

June 12, 2013

Today saw a somewhat better market tone. 

  • Japan’s Nikkei recovered most of its initial 2% drop to close down only 0.2%.
  • Share prices have climbed 1.8% in Spain and gained 1.9% in Indonesia, but declines were posted in Australia of 0.7%, South Korea of 0.6%, and Taiwan and India of 0.5%.
  • The Australian and New Zealand dollars rebounded more than 1% against the greenback.
  • The U.S. dollar rose 0.5% against the yen, 0.3% versus the Swiss franc and 0.2% against the euro.  It lost 0.2% against the loonie and 0.1% relative to sterling.
  • Ten-year German bund and British gilt yields are steady.  The 10-year JGB is up a basis point at 0.89%, however.  Investors will be closely watching the U.S. Treasury ten-year auction after yesterday’s disappointing 3-year results.
  • Gold (-0.2%) and oil (+0.1%) have been less volatile than in recent days at $1374.80 per ounce and $95.50 per barrel.

Chinese markets remained shut for the Dragon Boat Festival.

The Aussie dollar got a boost from a 4.7% improvement in Australian consumer confidence to a 4-month high in June.

Japanese core private domestic machinery orders retreated 8.8% in April but still exceeded the 1Q average by 0.7%.  Foreign machinery orders plunged 19.9% after a monster gain in March.   The Conference Board’s index of Japanese leading economic indicators rose just 0.4% in April, about a fifth as much as in March.

Japanese domestic corporate goods prices rose 0.1% in May, lifting the 12-month rate of increase by a half percentage point to 0.6%.  Export and import prices were 2.3% and 4.5% lower than in May 2012.

Several other countries  also reported price data:

  • CPI inflation in India edged down to 9.31% in May from 9.39% in April.  Food prices advanced 10.65% in the year to May.
  • German consumer prices went up 0.4% on month and 1.5% on year in May, which was the biggest on-year pace since February.
  • French CPI inflation ticked up 0.1% in May and rose a tenth percentage point in on-year terms to 0.9%.
  • Spanish CPI inflation accelerated to 1.7% from 1.4% in April.
  • Italian CPI inflation slipped to 1.1% from 1.2% in April.
  • Portuguese consumer prices rose 0.2% on month and 0.2% on year in May.

Britain’s claimant unemployment fell by 8.6K in May, registering a seventh consecutive drop.  The ILO-basis jobless rate held steady at 7.8% in February-April.  Wage earnings grew in the year to February-April by 1.3% with bonus pay and by 0.9% excluding such.

A 0.4% on-month rise in Euroland industrial production during April was the third increase in a row, reducing the 12-month rate of decline to 0.6% from 1.4% in March and 2.5% in January.  Member country results were polarized.  Output climbed 3.0% in Ireland, 2.8% in France and 1.2% in Germany but fell by 5.1% in Finland, 4.3% in the Netherlands, 3.6% in Portugal, 0.9% in Spain and 0.3% in Italy.

French nonfarm employment slipped 0.1% last quarter.  The French current account deficit held unchanged at EUR 2.8 billion in April.

Iceland’s 7-day collateralized central bank lending rate was kept unchanged at 6.0% as expected.

The  Spanish index of leading economic indicators rose 0.7% in April, a big improvement on drops totaling that amount in the prior two months. 

South Korean unemployment of 3.2% in May was up from 3.1% in April.  M2 money advanced by 5.1%.  Filipino joblessness rose to 7.5% in the first quarter. 

South African retail sales fell 0.6% in April, half as much as in March, but 12-month rate of increase slowed to 1.9% from 2.7%.

Bank Indonesia had been expected to leave its main interest rate at 5.75% tomorrow but announced a preemptive 25-basis point hike in the overnight deposit facility rate.  The move is meant to promote greater monetary stability.

Japan’s Financial Services Agency is said to favor depositors bail-in for failed banks, which would have investors shoulder some of the losses.

U.S. mortgage applications rebounded 5% last week from an 11.5% drop in the prior week.  The federal budget figures will be reported late today.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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