Some Guarded Optimism Regarding Greece
March 20, 2015
Talks yesterday between Greek leaders and that economy’s creditors were reportedly productive. Greece is to present a list very soon of reforms that it will do. Until then, the main loan will not go through, so Greece will need some kind of stop-gap support in the immediate time ahead. At least the sides are talking, but things are far from settled. The 10-year Greek bond yield is at 11.64%, and the Athens Stock Exchange index has rebounded 2.8%.
The German 10-year bund in contrast is unchanged at 0.18%. The Japanese 10-year JGB is flat at 0.32%, and the British gilt edged a basis point higher to 1.64%.
Share prices in Europe show gains of 0.8% in Germany, 0.5% in Spain, 0.4% in Italy, 0.3% in Switzerland, 0.2% in France but no change in Great Britain.
Stocks in the Pacific Rim went up 1.4% in China, 0.8% in Singapore, and 0.4% in Japan and Australia. Equities fell 0.4% in Hong Kong and 0.7% in India.
The dollar rose 0.2% against the yen and yuan but has declined by 0.5% relative to the kiwi, 0.4% versus the Aussie dollar, 0.3% vis-a-vis the euro and Swissie, and 0.2% against the loonie. Dollar-sterling is flat but weak at $1.4755.
WTI crude oil slipped by 0.7% to $43.66 per barrel. In contrast, the rebound of gold was extended 0.2% to $1,171.20 per troy ounce.
Minutes from the Bank of Japan’s February 17-18 meeting revealed some debate over possible damage to money market functionality from quantitative easing and were noteworthy in that government officials attending the session did not as usual urge the central bank to attain its 2% inflation goal by the earliest possible time. The worry is that excessive stimulus by depressing the yen will boost import prices, squeeze household disposable income and thereby sap badly needed consumer demand.
BOJ Governor Kuroda reiterated that 2% inflation is attainable a year from now.
Reserve Bank of Australia Governor Glenn Stevens speaking to the Chamber of Commerce promoted the merits of Aussie dollar depreciation, which helps the economy to shift from mining to other sources of economic growth. Stevens thinks the exchange rate will probably slip additionally.
The Central Bank of Chile’s main interest rate was left at 3.0% as analysts expected. Last year saw five 25-basis point cuts but none after September. Inflation exceeded expectations in January and February and is expected to hold above target for some months ahead.
German producer prices ticked up 0.1% in February as energy rebounded 0.7% on month. On-year PPI deflation was at 2.1%, as energy fell 5.5% and all other producer prices collectively slipped by 0.6%. The February figures were marginally lower than expected.
The eurozone seasonally adjusted current account surplus spiked upward to EUR 29.4 billion in January from a monthly mean of 22.2 billion euros in the final quarter of 2014. The trade surplus actually narrowed very modestly but net investment income shot up to EUR 11.5 billion from EUR 4.8 billion in December.
British public sector net borrowing in February was less than forecast at GBP 6.216 billion. Excluding intervention, such narrowed 9.7% to GBP 81.8 billion over the first eleven months of fiscal 2014-15.
Italy’s current account swung to a EUR 50 million surplus in January after recording a EUR 5.18 billion deficit in December.
Wage costs in Ireland accelerated marginally to an on-year advance of 6.4% from 6.3% the month before. The 12-month rise of Danish retail sales dropped to only 0.8% in February from 2.6% in January. Such has exceeded zero since September.
Chinese business activity edged 0.2 points higher to 52.2 in March, according to the MNI business indicator.
India’s index of leading economic indicators edged up 0.1% last month, while the index of coincident economic indicators stagnated.
The Filipino current account surplus in 4Q14 of $3.97 billion was 30% wider than the third-quarter surplus.
CPI inflation in Hong Kong accelerated to 4.6% last month from 4.1% in January. Consumer prices in Malaysia, by comparison, only rose 0.1% in the same span versus an on-year gain of 1.0% in January.
No U.S. data releases are scheduled. It’s the first day of spring, and the forecast in the Northeast is for more snow. Canada will be reporting both consumer prices and retail sales today. An interest rate meeting is scheduled today at Colombia’s central bank.
Copyright 2015, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Chile, BOJ minutes, Eurozone current account, Tsipras