Spoken Words

April 17, 2014

Bank of Japan Governor Kuroda reiterated his upbeat view that recovery will resume soon after the initial setback this quarter caused by a consumption tax.  While expressing satisfaction with current policy settings, he also indicated a readiness to augment stimulus if such becomes necessary.  The Bank of Japan released results of its quarterly branch managers survey.  Eight regional assessments were left unchanged, and just one was upgraded.  Five regions had been upgraded in the previous survey done in January.

Fed Chairwoman Yellen made dovish remarks stressing a need to encourage a better labor market performance.  The Fed Beige Book on Wednesday had corroborated the view that weather was responsible for much of the U.S. economy’s lull at the turn of the year but that the recovery appears now back on track.

French Finance Minister Sapin complained that the strong euro could dampen exports and overall growth in Europe.

Ahead of the Good Friday/Easter break, the dollar has trading down 0.4% against the Swissie, 0.3% versus the euro, 0.2% vis-a-vis the yen and 0.1% against sterling.  The greenback is 0.3% and 0.1% stronger against the Australian and New Zealand dollars and unchanged relative to the loonie and yuan.

Stocks in the Pacific Rim recorded gains of 1.6% in India, 0.6% in Australia, 0.5% in Indonesia, 0.3% in New Zealand and Hong Kong, and 0.2% in Taiwan.  Equities closed unchanged in Japan, South Korea and Singapore, while China’s market fell by 0.4%.  In Europe, stocks are down 0.6% in Spain, 0.5% in Italy, 0.2% in Germany and France, and 0.1% in Switzerland and Britain.

Ten-year German bund and British gilt yields are steady, while the 10-year JGB has slipped a basis point to 0.59%.

Gold fell below $1,300 to $1,298.40 per ounce. Oil, in contrast, advanced by a further 0.3% to $104.07 per barrel.

For the first time since November 2012, Japan’s government downgraded its assessment of the economy, declaring such to be on “a moderate recovery trend while some weak movements are seen lately due to a reaction after a last-minute rise in demand before the consumption tax increase.”  Consumption was said to show “weakness lately,” and exports are “flat.”  Industrial production has been “almost flat.”  Government officials remain hopeful that this setback will prove brief.

Foreign direct investment in China slowed significantly in February.  Such was just 5.5% higher in the first two months of 2014 than a year earlier.

According to compilations of the National Australian Bank, business conditions improved six points to a reading of zero last quarter, but business confidence slid two points to +6.  Separately, new motor vehicle sales in Australia fell by 0.3% in March and were 2.8% below the year-earlier level.

New Zealand consumer confidence rebounded 1.1% in March from a 0.8% decline in February.

Japanese consumer confidence fell 0.8 points in March to a 31-month low of 37.5.  Such crested last May at 45.7.  Department store sales soared in the month before the consumption tax hike, recording a 25.4% on-year increase in March.

Japanese stock and bond transactions generated a net 359 billion yen capital inflow in the week of April 12 versus a tiny outflow in the prior week.

South Korean producer prices posted an on-year decline in March for the 18th straight month.  The 0.5% drop was only about half as much as seen in February.

According to the Conference Board, India’s index of leading economic indicators recovered 0.2% in March after a 0.4% drop in February.

Singapore’s trade surplus narrowed 47% between February and March.  The March surplus was SGD 2.26 billion.

New EU car registrations, a measure of sales, were 10.6% higher in March than a year earlier.

German producer prices fell 0.3% on month and 0.9% on year in March.  Energy fell 0.8% on month and 2.6% on year.  All other producer prices were flat on month and 0.3% lower on year.

Portuguese producer prices fell 1.4% between March 2013 and March 2014.  The Greek current account deficit of EUR 709 million in February was 140% larger than in January. 

The National Bank of Serbia, whose one-week repo rate was lowered by 225 basis points over the final eight months of 2013, was left at 9.5%.  Such hasn’t been changed since the start of 2014.

Scheduled U.S. data releases today are the Philly Fed manufacturing index and weekly jobless insurance claims. Canada releases consumer price figures, and the Central Bank of Chile will be making a scheduled interest rate announcement.  Most markets are closed tomorrow.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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