Lower Bond and Stock Prices
August 19, 2013
Financial turbulence in Indonesia where 1) equities plunged 5.6% to a 21-month low, 2) the rupiah dropped 1% and touched 10,500/USD for the first time in four years, and 3) the 10-year bond yield advanced to a 29-month high. Markets have reacted adversely to a string of bad economic news including Friday’s report of a $9.8 billion current account deficit last quarter, most since at least 1989. Growth has also dipped under 6% for the first time since 2010, and inflation is at a 4-year high and marginally above 8.5%.
Japan reported trade figures and the index of leading economic indicators. Both suffered setbacks.
- The seasonally adjusted customs trade deficit jumped to a 4-month high of JPY 994 billion in July, and June’s gap was revised to JPY 663 billion from JPY 599 billion. On-year import growth of 19.6% eclipsed a 12.2% advance in exports, pushing the unadjusted trade deficit out to JPY 1.024 trillion from JPY 182 billion in June and JPY 529 billion in July 2012.
- Japan’s index of leading economic indicators sank to a 3-month low of 107.2 in June from 110.7 in May. The coincident and lagging indices of economic indicators fell to two-month lows.
The dollar shows overnight gains of 0.4% against the yen, 0.1% against the yuan, and 0.3% versus the Aussie dollar but has lost 0.3% vis-a-vis the kiwi, 0.2% relative to the euro and sterling and 0.1% against the Swiss franc. The loonie is unchanged.
Asian stock markets closed mixed. Besides the aforementioned plunge in Indonesia, equities closed down 1.6% in India, 0.8% in Singapore and the Philippines, 0.3% in Taiwan, 0.2% in New Zealand and Hong Kong, and 0.1% in South Korea. But the Chinese and Japanese markets climbed 1.2% and 0.8%, and Aussie stocks closed unchanged.
In Europe, stocks are so far down 1.4% in Italy, 0.7% in Spain, 0.5% in France and 0.1% in Germany and Britain.
Ten-year sovereign debt yields have risen by three, two and one basis points in Britain, Germany and Japan. A rise in 10-year Treasury yields is signaled in futures trading.
The price of gold is up 0.2% at $1374.30 per ounce. That of WTI crude oil has dipped 0.2% to $107.20 per barrel.
New Zealand producer output prices rose 1.0% on quarter and 0.8% on year in 2Q13. That’s higher than forecast. Producer input prices went up 0.6% from 1Q and remained unchanged in year-over-year terms. New Zealand’s service-sector purchasing managers index improved 3.1 points to 58.1 in July and surpassed the 50 threshold depicting an upswing for the 10th month in a row.
Australian motor vehicle sales, down 3.5%, suffered their largest month-on-month drop in 26 months in July. The 12-month comparison, a rise of 3.0%, was down from 6.9% in the year to June.
Chinese home prices were 7.5% higher than a year before in July. They shown a positive 12-month change all year.
Britain’s Rightmove home price index in August suffered its first sequential monthly drop, 1.8%, in eight months, but the 12-month rate of increase expanded anyway to 5.5% from 4.8% in the year to July.
Greece’s current account surplus of EUR 663 million in June was nearly 20 times greater than the May surplus.
Icelandic CPI inflation accelerated to 4.2% in July from 3.1% in June.
Thailand’s 0.3% quarterly GDP decline in 2Q after a 1.7% slump in 1Q confirmed a technical recession there. Hong Kong unemployment remained at 3.3% in July.
No meaningful U.S. data releases are scheduled today.
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Indonesian current account, Japanese trade, New Zealand PPI