New Developments Abroad

May 7, 2008

It was a bigger night for Obama than Clinton. Obama won the North Carolina primary by a solid 56-42% margin and moved within 200 delegates of the Democratic Party nomination. Clinton scraped out a razor-thin 51-49% victory in Indiana but did not bow out of the race.

The dollar is broadly higher in a continuing rebound. It’s largest gains of 0.8% are against the kiwi and sterling, followed by advances of 0.6% against the euro, 0.5% versus the yen, and 0.4% against the Swissy and AUD. USD shows a 0.2% uptick relative to the C-dollar.

The Nikkei rose 0.4%. After hitting a 7-month high of 1.68%, the 10-year JGB yield settled back to 1.655%, up 2 basis points net. Most other sovereign bond prices are lower (yields higher).

China’s CSI 300 stock index fell 4.7%, and the Hang Seng dropped 2.5%. Transaction costs on conversions between yuan and Hong Kong dollars were raised over sevenfold. European bourses are mostly up: Dax +0.9% and Ftse +0.6%.

The Reserve Bank of New Zealand has kept its cash rate at 8.25% but released a semi-annual Financial Stability Report warning of a possible steeper-than-expected economic slowdown if global tensions spread. The New Zealand housing market is in rapid retreat.

Minutes from the Swedish Riksbank’s meeting in which a 4.25% repo rate was kept point to steady rates for quite a bit longer and identify slightly greater risk of higher than lower rates in 2008. Inflation is high, but growth risks are skewed to downside.

Real retail sales in Euroland fell 0.4% m/m and 1.6% y/y in March. A 0.2% m/m rise was forecast. Retail sales firmed just 0.6% saar in 1Q after a 3.1% drop in 4Q07.

German industrial orders fell 0.6% in volume terms in both March and February. They slumped 5.2% saar in 1Q08. In March, domestic capital goods orders, a leading indicator of business investment, slumped 2.1% m/m. Both domestic (-0.9%) and foreign orders (-0.4%) decreased in March. Total orders had been projected to recover 0.3% after an initially reported 0.5% drop in February.

Germany’s construction PMI sank to a 9-month low of 43.4 in April from 48.1 in March. The orders sub-component was very weak at 38.5. Australia’s construction PCI index also connoted contraction with a 42.6 reading in April after 47.7 in March.

South Korea’ money growth remained above 10% y/y in March. Opinion is divided over whether the Bank of Korea will raise its 5.0% benchmark rate later this week. Policy has been steady since August but was tightened from 3.75% in Sept 2005 to combat inflation.

Britain reported a further decline in consumer sentiment to 70 in April from 77 in March. U.K. industrial production and factory output each fell 0.5% m/m in March. Production had been projected to dip just 0.1%. Output slid 0.2% in 1Q. Industrial production in 1Q was just 0.6% greater than a year earlier. The British Retail Consortium reported a 1.2% y/y rise in shop prices in April.

France’s trade deficit jumped 68% to EUR 4.75 bln in March from February.

Oil hit yet another high on Tuesday of $122.73/bbl and is 0.1% above yesterday’s New York close, trading currently at $121.99. Gold is off 0.2% at $875.70 per ounce.


Comments are closed.