New Overnight Developments Abroad: Stocks Up and Dollar Down

December 30, 2008

The dollar has posted broad losses of 1.6% against the euro, 0.9% versus the Australian dollar, 0.7% against sterling and the Swiss franc, 0.6% relative to the yen and Canadian dollar, and 0.3% against the kiwi. Even the rouble firmed against the dollar.

The Nikkei firmed 1.3% in its final session of 2008. The Dax is trading 1.8% higher, and the Ftse and Paris Cac are up 1.0%. Most Asian bourses gained, but China lost 1.2%.

Israel’s message to the world: mad as hell and not going to take it anymore. Nevertheless, oil settled back under $40 with a drop of 1.4%. Gold -0.2%.

The yield on 10-year JGB’s hit a low of 1.155%, and the 20-year JGB low was 1.66%. Both levels represent the lowest since the summer of 2003.

Plunging energy prices depressed on-year German CPI inflation further in December, offsetting higher food prices and package tour mark-ups. Among six reporting states in Germany, four posted monthly consumer price increases of 0.4%, and the other two had gains of 0.3%.

Euroland money and private credit growth slowed sharply in November. M3 rose 7.8% in the year to November, down from 8.7% in October. Private loans advanced 7.1%, down from 7.8% in the year to October, and recorded the smallest monthly change in over a decade. Loans had risen 11.1% in the prior statement year to November 2007. M1 slowed to 2.3% year-on-year from 3.7%, but loans to nonfinancial firms still grew faster than 10% with a rise of 11.1%.

The Bloomberg PMI-retail index for Euroland edged up to 41.4 from 40.6 in November but remained well below the 50-line between expansion and contraction. France, Germany, and Italy had scores of 48.3, 42.3 and 31.9 in December.

South Korea and Thailand each released a bunch of weak data. The South Korean business sentiment index fell to its lowest level since April 1998, and industrial production plunged 10.7% in November. The Bank of Korea sold dollars today. Thai personal consumption and business investment fell in November by 4.1% and 1.1%.

China’s central bank, the PBOC, signaled a pause in its rate-cutting.

French housing starts were 14.4% lower in September-November than in June-August.

Italian producer prices dived 1.6% in November, the biggest monthly drop since at least 1980. Non-energy PPI fell 0.7%. On-year PPI inflation was 2.3%, a third of September’s 7.3%.

The Bank of Japan did not intervene this month, continuing a streak of non-intervention in currency markets since mid-March 2004. Barclays expects Japanese real GDP to slump around 12% at an annualized rate in 4Q, the worst quarterly drop in 34 years.

The Swiss consumption index fell from 1.32 in October to a 44-month low of 0.96 in November.

Spanish house prices slid 1.7% last quarter. Britain’s Land Registry reported a drop in house prices of 1.9% on month and 12.2% in the year to November.

Consumer confidence in Iceland bounced slightly to a still-depressed 25.3 reading in December from 23.2 in November and 58.9 in October.

The U.S. government expanded its bailout of GM. U.S. data covering house prices, consumer sentiment, and Chicago manufacturing activity get released later today.


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