New Developments Abroad

June 24, 2008

The dollar is mixed, with drops of 0.6% against the Swiss franc and 0.3% each against the Aussie dollar and euro but with gains of 0.2% against the Canadian dollar and 0.1% each versus sterling and the yen.  The kiwi is unchanged.

Little change overnight in most sovereign bond yields.  The FOMC is expected to announce no change in the 2.0% Federal Funds rate tomorrow following a 2-day meeting that begins today.  A diversity of opinions among policymakers has emerged centered on how aggressively to respond to inflation while growth remains very tenuous.

The ten-year JGB yield slid 1.5 basis points to 1.70% and touched 1.69% during the day versus last week’s high of 1.896%.  Two-year auction results included a bid-cover ratio of just 2.47.

Oil (+0.7% to $1378.63/bbl) and gold (+0.5% to $891.60/oz) are trading somewhat higher.

European stocks have made sharp declines of 1.5% in the Dax and Cac40 and 1.1% in the Ftse.  The Hang Seng fell 1.1%, but China’s CSI 300 climbed 2.2%.  The Nikkei dipped 0.1%.

On the heels of Monday’s disappointing Ezone PMI results came news today of sharp declines in German and Italian consumer sentiment.  Germany’s 3.9 score after 4.7 constitutes a 2-year low.  The Italian index sagged to 100 from 103.2.  French consumer spending, however, jumped by an unexpected 2.0% in May, three times more than forecast on a 5.6% rebound in car purchases.  French business sentiment stayed at 102 in June instead of dropping a point as forecast. Such was at 108 in March, and French housing approvals plunged by 19.9% y/y in March-May and by 10.7% y/y in May alone.

Two vacancies remain on the BOJ policy board after the LDP’s political opposition rejected yet another proposed candidate.

Swiss consumer spending fell to an 17-month low in May.  Denmark reported the weakest reading for its consumer confidence since February 1999.

Russian GDP rose 8.4% y/y in January-May on the strength of oil.

China’s yuan edged up to another new high for the move and shows an annualized gain of 13.6% since end-2007 as midyear fast approaches.

According to data from the British Banking Association, home mortgage approvals sank 56.1% y/y to their lowest level since at least 1997.

U.S. home prices and consumer confidence will be released today.



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