New Overnight Developments Abroad: Deluge of Data as August Ends

August 29, 2008

The yen rose 0.7% against a softer dollar.  The dollar also lost 0.4% against the kiwi and 0.2% against the euro, Swiss franc, and Canadian dollar.  Sterling is unchanged against the dollar, while the Australian dollar edged 0.1% higher.

The Nikkei leaped 2.4% but still lost 5.2% in the month of August. Other equity markets mostly gained as well.  India +3.6%. China +2.4%.  Indonesia +1.0%.  Ftse and Paris Cac +0.5%.  Dax +0.2%.  Hong Kong +1.4%.

The yield on 10-year JGB’s hit a new 4-month low of 1.40% and is down 2 basis points at 1.405%.  Bond yield fell also in Europe.

Oil advanced 0.9% to $116.67 but is 6% below its end-July level and 21% under its mid-July record peak.  Gold firmed 0.6% to $841.90/ounce.

Japan released a ton of indicators that were reassuring on balance.  Unemployment settled back to 4.0% in July from 4.1% in June, but the job offers ratio of 0.89 was under 0.90 for the first time since October 2004. Employment fell 0.8% in the year to July.  Real household spending rose 0.9% m/m and fell by less (0.5%) from a year earlier than expected.  Core national consumer price inflation advanced in July to 2.4% from 1.9%.  Such includes energy, unlike core inflation in other countries, and thus probably represents a peak for now. Core inflation for August in Tokyo of 1.5% was less than forecast.  National non-food, non-energy CPI inflation remains low at 0.2%.  Japanese industrial production rose 0.9% m/m in July and 2.0% y/y.  Analysts were looking for a 0.5% decline, so third-quarter production will not fall as steeply as feared even though August is projected to post a sharp 2.9% decline.  Total retail sales rose 1.9% y/y in July versus an on-year increase of just 0.2% in 2Q08.  Large-store retail sales slid 0.7% in the year ot July.  Housing starts (+19.0% y/y) increased in July for the first time since June 2007.  Construction orders shot up 42.3% y/y, their first advance since March and following declines of 11.7% in June and 25.2% in May.

Euroland reported CPI, unemployment, and economic sentiment.  The flash CPI indication for August shows a greater-than-expected retreat to 3.8% from 4.0% in July.  The jobless rate held at 7.3% for a fourth straight month in July.  Overall economic sentiment dropped further than forecast to 88.8 in August from 89.5 in July, 94.8 in June and 97.6 in May.  While consumer sentiment ticked up to -19 from -20 in July, industrial sentiment worsened to -10 from -8, and sentiment in retail slid to -11 from -9 in July and -4 in June.  The expected inflation components fell among both consumers (to 22 from 30) and businesses (to 17 from 20).

Australian private-sector credit rose 0.5% in July and by 11.2% from July 2007.  New home sales in Australia fell 7.2% to a 2-year low in July.  These data leave a likely central bank rate cut to 7.0% next Tuesday as the most likely decision.

The Swiss index of leading economic indicators weakened in August to 0.68 from a downwardly revised 0.85 in July.  Swiss growth in 2007 was revised up by two-tenths to 3.3% but will be considerably less in 2008.

Spanish retail sales fell 6% in July.  Ireland recorded its slowest credit growth in six years.  Polish on-year GDP growth of 5.8% in 2Q was higher than forecast but lower than the first quarter’s 6.1%. Italian retail sales dropped 0.5% m/m in June and by 3.4% from June 2007, the largest 12-month decline since April 2005.  Italian consumer prices firmed 0.1% m/m and 4.0% y/y in August.

Sweden‘s current account surplus contracted 50% between 2Q and 1Q.  Norwegian real retail sales fell 0.6% in July.

South Korea posted the largest current account deficit ($1.8 billion) in June since March following a small surplus in May.  Industrial output dipped 0.2% in July.

British consumer confidence unexpectedly improved in August to -36 from -39 in July but compared to -19 in March and -4 in August 2007.  National pride from British winnings in the Olympics was cited for the bounce. Medium-term U.K. pay deals edged up to 3.5% in May-July but remained less than CPI inflation.

German real wholesale sales firmed 0.3% m/m and 3.5% y/y in July.

GDP in India rose 7.9% in the year to 2Q08, down from 8.8% y/y in 1Q.

Japanese Finance Ministry officials said a $16.5 billion fiscal stimulus package would not result in the issuance of any deficit-covering bonds.

Canadian 2Q and June GDP figures are due at 12:30 GMT.  So too are U.S. personal consumption and income at the same hour.


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