New Overnight Developments Abroad: Lehman Sale Considered Imminent

September 12, 2008

Rumors swirling that the Fed and Treasury are helping to shop Lehman Brothers by the weekend.  Washington Mutual also getting watched.

The dollar climbed 1.0% against the Australian dollar and 0.3% versus the yen but is otherwise lower, with drops of 0.9% against the euro, 0.8% against sterling, 0.6% against the kiwi and C-dollar, and 0.3% against the Swiss franc.

Oil rebounded 1.3% to $102.18/barrel as Hurricane Ike nears landfall.  Gold advanced 2.0% to $760.30 per ounce.

The yield on 10-year JGB’s climbed 4 basis points to 1.54% despite a downward revision of 2Q Japanese growth.  European sovereign bond yields up sharply.

Equities are ending a tough week on an up-note.  Asian trading saw the Nikkei rise 0.9% and gains of 1.2% in Thailand, 2.5% in South Korea, 1.9% in Australia, 0.9% in Taiwan and 0.8% in New Zealand.  But India (-2.7%), Vietnam (-4.2%) and Indonesia (-3.5%) suffered further substantial erosion.  In Europe, stocks are higher by 0.8% in Germany, 1.2% in France, 1.1% in Great Britain, 1.0% in Switzerland, and 1.2% in Italy.

Japanese 2Q growth was revised to -3.0% saar from -2.4% saar.  -3.3% had been expected by street analysts.  Real GDP rose just 0.7% from 2Q07, and the GDP price deflator fell 1.5% over the past year.  Japanese industrial production was revised upward to a gain of 1.3% from 0.9% reported initially.  Capacity usage rose 1.4% in July, and capacity was 0.8% greater.  The solid July-over-June increase left such 0.7% above the 2Q average level.

Industrial output in India rose 7.1% y/y, more than forecast.

New Zealand retail sales fell 0.8% m/m in July, about three times more than had been forecast.  The data were seen justifying this week’s 50-basis point rate cut by New Zealand’s central bank and pointing to more monetary stimulus to come.

The Bank of France projects French growth in 3Q of 0.1%.  Its business sentiment index unexpectedly ticked higher to 94 in August from 92 in July.

Euroland industrial production slid 0.3% m/m in July and fell 1.7% from July 2007.  A 0.7% drop from a year earlier had been anticipated.  Italy announced earlier today that its industrial production fell 1.1% m/m and 3.2% y/y in July.  Sizable monthly declines also occurred in the Netherlands, Germany, and Ireland to offset France’s 1.2% recovery.

Jobs in Euroland rose 1.2% in the year to 2Q08, down from a four-quarter increase of 1.6% in 1Q.  The quarter-on-quarter rise of 0.2% was also smaller.

EU finance ministers met in Nice, after which the group’s leader, Juncker said the slowdown has been more pronounced than expected and is not over.

China reported a bunch of August data.  A drop in on-year industrial production to 12.8% from 14.7% in July was impeded by factory shutdowns for the Olympics, but retail sales growth of 23.2% y/y surprised on the upside.  Yuan lending maintained a brisk pace of 29.3% y/y.  M2 grew 16.0% y/y after 16.4% in July, and M1 slowed more sharply to 11.5% from 14.0%.

Portuguese consumer prices fell 0.5% m/m but rose 3.0% y/y in August.  Swedish GDP in 2Q was flat from 1Q and up just 0.6% y/y.  French harmonized consumer prices slid 0.1% m/m in August, cutting the 12-month pace of climb by a half-percentage point to 3.5%.

Peru became the latest emerging market to have a central bank rate hike.  Such rose 25 basis points to 6.5%.  Pakistani CPI inflation accelerated to 25.3%, most in 30 years. 


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