Weak Japanese Data and a New Low in German 10-Year Bund Yield

July 29, 2014

Although unchanged on balance, the bund touched 1.119% overnight, which was even below the prior record low of 1.127% in June 2012.

Japanese real household spending and retail sales posted third on-year declines in a row, while jobless rate rose to a five-month high.

On the geopolitical tension front, Israel intensified its offensive against Gaza, U.S. officials accused Russia of breaking rules of the 1987 arms treaty, and the EU moved closer to imposing tougher trade sanctions against Russia.

The 10-year British gilt yield slipped three basis points, while the 10-year Japanese JGB remained at the recent low of 0.51%.

The dollar’s overnight movement was again minimal.  There’s been no change versus the euro, Swissie or yuan and rises of 0.1% against the yen, loonie and Australian dollar.  The biggest changes are gains of 0.4% relative to the kiwi and 0.2% vis-a-vis sterling.

Share prices rose 0.9% in Hong Kong, 0.6% in Japan and South Korea, and 0.3% in China but fell by 0.5% in India, 0.4% in New Zealand, 0.3% in Taiwan and 0.2% in Indonesia.  European stocks show overnight gains so far of 0.8% in Italy, 0.4% in Spain, 0.3% in Britain, and 0.2% in Germany and France.

Comex gold rose 0.4% to $1,310.80 per ounce.  WTI oil edged 0.1% lower to $101.60 per barrel.

Investors await the release of the Conference Board’s measure of U.S. consumer confidence, the Case-Shiller home price index, and weekly chain store sales.  Looming tomorrow is the FOMC policy statement and the first glimpse of 2Q GDP.  Then on Friday arrives the Labor Department jobs report.

Japanese economic statistics released today show

  • A rise in the jobless rate to 3.7% from 3.5% despite a 22-year high of 1.10 in the job offers-to-seekers ratio.  Employment was 0.9% higher than in June 2013.
  • Total retail sales posted a smaller monthly rebound in June of 0.4% and a third straight on-year decline, this time of 0.6%.
  • Large-store retail sales also record a third on-year drop in June and were 3.2% weaker in 2Q than a year before.
  • The Shoko-Chukin index of small business confidence recorded a fourth consecutive sub-50 reading in July.  The score of 48.7 follows readings of 47.3 in June, 46.6 in May and 45.4 in April.
  • Real household spending fell 3.0% on year in June despite a 1.4% monthly rise in seasonally adjusted terms.  Real disposable income was 8.0% lower than in June 2013.

Bank of Japan Board member Ishida expressed confidence that 2% core inflation will be secured by next year.

Australian new home sales rose 1.2% on month in June and climbed 2.6% in the second calendar quarter.

Singaporean producer price inflation slowed to 0.1% in June from 0.9% in May.  The South Korean current account narrowed slightly in June but continued the streak of uninterrupted surpluses begun in March 2012.

German import prices rose 0.2% on month in June while falling 1.2% on year.  The rate of non-mineral oil import price deflation was 1.7%.  Export prices were 0.1% lower on year.

According to Bank of England data, M4 money contracted by 0.6% in the year to June.  Mortgage approvals rose to a 4-month high of 67,196 in the month, but the growth of consumer credit was only about a half as much as forecast.

Greek producer prices increased 0.4% on month and 1.1% on year in June.

Spanish retail sales dropped 0.7% in June, their first slide since March.  This trimmed the 12-month increase to just 0.2% from 0.5% in May and 0.7% in April.

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

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