New Developments Abroad

May 9, 2008

Equities are sharply lower. Sovereign bond prices are higher (yields down). Commodity prices are up. Wire news services overnight were filled with poor inflation reports.

The dollar is mixed but mostly lower, with losses of 0.9% against the Swiss, 0.7% against both the yen and C-dollar, and 0.4% against the euro. Greenback is up 0.4% relative to the A-dollar and +0.2% against the pound and kiwi.

The Nikkei lost 2.1%. Dax and Ftse each are trading off 1.4%. Hang Seng -1.5%. China’s CSI 300 off 1.2%. Kospi -1.3%. A lower U.S. open is signaled. 10Y JGB yield fell 8.5 bps to 1.55%.

Oil hit another record high of $124.92/bbl and is 0.9% higher. Gold rose 1.0% to $890.50/oz.

The Reserve Bank of Australia released its quarterly monetary policy statement, which on the whole reads hawkishly. No near-term room for easing. Projected inflation revised higher and, despite downward revisions to forecast growth, doesn’t return to target corridor until 2010.

ECB’s quarterly bank lending survey found tighter borrowing conditions for households and firms in 1Q08 but sees a better second quarter.

Japan’s leading economic index slumped to 20.0 in March from 54.5 in Feb. Coincident index just 33.3, while lagging index fell too to 25.0 from 40.0. Japanese reserves fell $11.75 bln in April.

French industrial output slid 0.8% m/m in March, four times more than anticipated.

South Korea producer prices jumped 2.6% m/m and 9.7% y/y in April. These are the biggest rises since 1998. Department store sales growth declined to 4.3% in April from 6.7% in March.

Chinese producer price inflation edged up a tenth in April to 6.1%, most since Nov 2004. Export growth slowed to 21.8% y/y in April from 30.6% in March, signaling a trade surplus last month of about $16.5-!6.8 bln.

German wholesale prices rose 0.6% m/m in April, twice street expectations, and 6.9% y/y.

Norwegian CPI and PPI inflation in April was 3.1% y/y and 21.3% y/y.


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