New Developments Abroad

May 16, 2008

The U.S. dollar is lower except against the C-dollar, with drops of 0.5% against the A-dollar, 0.4% against the kiwi, 0.3% against the Swissy, 0.2% against the euro and 0.1% against the pound. The Nikkei lost 0.2%. China’s CSI 300 index fell 0.3%. But the Dax (+1.3%) and Ftse (+0.6%) are trading higher. Ten-year JGB yields hit a 7-month high of 1.71%.

Oil firmed 0.7% to $125.03/bbl. Gold rose 0.6% to $885.6 per ounce.

Japanese GDP growth of 3.3% saar in 1Q after 2.6% in 4Q07 exceeded the consensus forecast of 2.5%. Growth last quarter was powered by consumption (+3.4% saar) and net exports, which accounted for 62% of all growth in the quarter. The GDP price deflator fell 1.4% y/y in 1Q08.

Japanese industrial production in March was revised to show a m/m drop of 3.4% compared to a drop of 3.1% reported initially. The inventory/sales ratio leaped 7.1% m/m in March.

Euroland posted a trade deficit in March for the third time in four months. There was a deficit of EUR 12.2 bln in 1Q08 compared to a gap of EUR 1.3 bln in 1Q07, caused by a bigger energy import bill.

Growth in Hong Kong of 1.8% (7.1% y/y) last quarter exceeded expectations.

Wholesale price inflation in India of 7.83% y/y in early May was at a 3-1/2 year high, fanning expectations of another reserve ratio increase coming soon.

Japanese consumer confidence fell from 36.7 in March to 35.2 in April, lowest since March 2003. As in Europe, Japanese growth has slowed noticeably this quarter.

Swiss retail sales unexpectedly fell in the year to March.

Producer price inflation in New Zealand was much higher than assumed in 1Q08. The PPI-I rose 2.3% from 4Q07 and 7.4% y/y, while the PPI-O went up 1.8% q/q and 6.1% y/y.
Denmark’s benchmark central bank rate was lifted 10 basis points to 4.35%.

Markets await U.S. housing starts data due at the U.S. open.


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