Geopolitical Clouds

August 8, 2014

Geopolitical worries have depressed long-term interest to an amazing extent.  The 10-year Treasury yield of 2.38% is down four basis points, and the 30-year is at a 14-month low.  British gilts and Japanese JGB yields slid another 2 basis points each, and the German bund is down a basis point.

Japan’s Nikkei plunged 3%, most in five months, but the Dow is trading up 0.8%.  Stocks fell 1.3% in Australian, 1.1% in South Korea, 0.8% in Singapore and New Zealand and 1.0% in Indonesia.  German, Swiss, British and French markets fell but by 0.5% or less.

The euro and Swissie are 0.4% higher.  Dollar/yen is steady.  No meaningful change to report in gold or oil.

The Bank of Japan again left policy settings unchanged but downgraded its views about exports and industrial production.

Japan posted a JPY 399 billion current account deficit in June, which in seasonally adjusted terms translates to a JPY 126 billion surplus versus a surplus of JPY 386 billion in May.

Japanese bank lending growth of 2.2% on year remained very subdued in July.

Canadian employment rose just 0.2K last month, less than expected after a 9.4K decline in June.  The jobless rate slid to 7.0% from 7.1%, however.

U.S. productivity rose 2.5% last quarter, limiting the rise in unit labor costs to just 0.6% on quarter and 1.9% on year.

Britain’s trade deficit in June of GBP 2.46 billion overall and GBP 9.41 billion on just goods was not much changed from May results.

Germany’s current account surplus of EUR 15.0 billion in June was EUR 1.8 billion greater than in May.

French industrial production rose 1.3% in June but fell 2.0% on year.

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

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