Still Awaiting News on Greek Talks

February 20, 2015

Today is a self-imposed D-day on talks between the newly elected Greek government and its creditors.  Led by Germany, the latter insist that Greece abide by all previously agreed policy conditions or aid will be shut off at the end of this month.  The Greeks want a bridge loan, not a mere debt extension.

Preliminary purchasing managers survey results for February covering Japan, the eurozone, Germany and France yielded mixed results.

European currencies are somewhat softer.  The dollar has risen 0.4% against sterling, 0.3% versus the euro and 0.2% relative to the Swiss franc but declined overnight by 0.7% vis-a-vis the Australian dollar, 0.4% versus the New Zealand and Canadian dollars, and 0.2% against the yen.  The yuan is steady.

China, Hong Kong and a number of other markets in Asia remained closed for the Lunar New Year.  Japan’s Nikkei closed 0.4% higher and at its best level since May 2000.  Share prices rose 0.4% in New Zealand but lost 0.4% in Australia.  In Europe, equities are mixed.  The Paris Cax and German Dax are down 0.2%.  Milan and Zurich have edged 0.1% firmer, while the Madrid IBEX slid 0.1%.  The Ftse is 0.4% higher.

Greek market results are conflicting.  The 10-year sovereign debt yield rose another six basis points on pessimism toward the talks, but Greece’s stock market is up by a further 1.5%.

German, Japanese, and British 10-year sovereign debt yields are unchanged from yesterday.

Comex gold and WTI oil prices have fallen by 0.3% and 0.5% to $1,204.00 per ounce and $50.91 per barrel.

Japan’s manufacturing PMI reading dropped by 0.7 points to an 8-month low of 51.5 according to preliminary findings.  However export orders grew at their fastest pace in four months, thanks to renewed yen slippage.

Euroland’s composite purchasing managers index rose by 0.9 points to a 7-month high of 53.5.  Analysts were anticipating a smaller increase for February.  Manufacturing (51.1) and services (53.9) also had their highest readings since last July.  The data, which include the fastest jobs growth since 2011, suggest first-quarter GDP growth of 0.3%.

France’s composite PMI jumped 2.9 points to a 42-month high of 52.2, but manufacturing and services diverged.  The factory index dropped back 1.5 points to a 2-month low of 47.7, while services improved by four whole points to a 42-month high of 53.4.

Germany’s composite PMI score of 54.3, like Euroland’s, was at a 7-month high.  Manufacturing (50.9) lagged with a 2-month low in the production sub-index and was the same reading as in January.  But services rose by 1.5 points to a 5-month high of 55.5.

German producer prices fell 0.6% on month in January.  That was more than forecast as energy tumbled 0.6% and all other producer prices eased 0.1%.  The 12-month 2.2% drop was the largest on-year decline since February 2010.

British retail sales in January weakened more than forecast, declining 0.3% overall and by 0.7% excluding autos.  The respective on-year changes, however, remained solidly positive at 5.4% and 4.8%.  The U.K.’s budget surplus last month was the largest in seven years. 

Irish producer prices increased 2.2% on month and 4.1% on year in January.  In January, too, Iceland’s monthly wage costs climbed 0.7% on month and 6.3% on year.  Italian consumer prices fell 0.4% on month and 0.6% between January 2014 and last month.

Italian industrial orders bounced 4.5% upward in December, with a 1.4% increase in sales.

Dutch consumer spending rose 0.5% in December, a third straight advance, but consumer confidence in The Netherlands dipped a point in February to a negative six reading.

Danish retail sales posted a 2.4% 12-month rise for a second straight time in January.  Swedish economic sentiment dropped to 104.8 this month from 105.6 in January.  Consumer confidence slid by 1.2 points, and confidence in manufacturing and services fell 0.8 points.

The Greek current account surplus in 2014 of EUR 1.656 billion was 52% bigger than in 2014, but December saw a EUR 870 million deficit.

Canadian retail sales get released today.  Markit Economics will report its U.S. manufacturing purchasing managers survey preliminary findings.  Colombia’s central bank announces its latest interest rate decision.  Next week finds Janet Yellen presenting the Fed’s semi-annual economic testimony before Congress on Tuesday and Wednesday.  These hearings were originally known as the Humphrey-Hawkins testimony, and we old-timers still know the market-moving event by that name.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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