New Developments Abroad: Oil Again Soaring And Dollar Soft

June 30, 2008

Oil (142.88/barrel) is 1.9% above Friday’s closing level and near the $142.99 record high.  Gold firmed 0.4% to $935.40/ounce.

The U.S. dollar shows fresh losses of 0.8% against the Australian dollar, which hit its strongest level since February 1983, and the yen.  The buck also lost 0.6% against the kiwi, 0.3% against the Canadian dollar and 0.2% against the Swiss franc and euro.  Sterling is 0.1% weaker.

The Nikkei fell 0.5%.  In Asia, China’s CSI 300 lost 0.9% on speculation about a near-term rate hike.  Indian stocks slumped 2.5%.  In Europe, the Dax (-1.1%) and Paris Cac (-0.4%) are lower, while the Ftse rebounded 0.7%.

Sovereign bond yields in Europe are sharply higher, but the 10-year JGB yield slid another 3 basis points to 1.595%.

Japan’s manufacturing PMI in June had a reading of 46.5, lowest since Feb 2002, versus 47.7 in May and 50.8 in February 2007.

Japanese construction orders plunged 25.2% y/y in May after an 8.4% drop in April and a 1.6% increase in the fiscal year to March.  Housing starts posted an on-year decline of 6.5%, the 11th straight negative reading and twice as big as the drop that was expected.

The TD-MI inflation gauge in Australia rose to a 5-year high of 4.8% from 4.5% in May.  But a 2-year low in private credit growth of 13.4% is another sign that economic growth is slowing under the weight of the Reserve Bank’s restrictive monetary policy.  The central bank’s monthly policy meeting tomorrow is expected to leave its cash rate unchanged at 7.25%.

Euroland’s flash CPI reading for June was 4.0%, most since May 1992 and up from 3.7% y/y in May and 1.9% in June 2007.  The acceleration was led by energy.

Italy’s CPI accelerated to 3.8% in June, most since July 1996, and the harmonized index of consumer prices was up 4.0% y/y, matching the pace of Euroland as a whole.

Norwegian retail sales jumped 1.2% m/m in May, four times greater than forecast.

In South Korea, business sentiment in manufacturing weakened from 88 in June to 81, lowest since February 2005.

British productivity growth slowed from 1.6% in 4Q07 to just 0.6% last quarter.  Unit labor costs went up 2.6% y/y, compared to 2.1% in 4Q07.

British mortgage approvals of 42K in May were their weakest since March 2001, and net mortgage lending grew at its slowest rate since July 1996.  British M4 rose 10.0% y/y in May, down from 10.9% in April.  British consumer confidence sank to -34 in June, weakest since March 1990, from -29 in May and -3 in June 2007.  The Hometrack index of house prices fell 1.0% m/m and 3.2% y/y in June.

Real wholesale sales in Germany fell 0.8% y/y in May.  They were also 0.9% lower than in April.

Moody’s upgraded Japanese local currency debt, but such did not discernibly affect the JGB market today.

The Bank for International Settlements, the so-called central bank for central banks, is warning of a deeper and more protracted global downturn than has been anticipated.


Comments are closed.