New Overnight Developments Abroad: Another Huge Drop in German Orders

February 5, 2009

Investors expect the Bank of England to cut its key rate 50 basis points to 1.0% and the ECB to leave its rate at 2.0%. There are also central bank decisions today in the Czech Republic, Peru, and South Africa. Each is likely to unveil a rate cut.

The dollar rose 0.4% against the yen and 0.1% versus the Swissy but is down by 1.1% against the kiwi, 0.5% relative to the Australian dollar, 0.3% against sterling and 0.2% against the euro and Canadian dollar.

The Nikkei lost 1.1%, and the Dax (-0.3%), Cac40 (-0.7%) and Ftse (-0.1%) are trading lower. Share prices also fell 0.3% in Australia, 0.7% in China, 1.2% in Indonesia, 1.3% in South Korea and 2.9% in Vietnam.

Sovereign bond yields are higher in North America and Europe, but the 10-year JGB yield settled back 2 basis points to 1.325%.

Gold advanced 1.5% to $915.60, while oil moved 0.6% higher to $40.44 as the $40 level held.

German industrial orders sank another 6.9% in December and by 27.7% from a year earlier. Last quarter, total orders fell 49.6% at a seasonally adjusted annual rate.  Foreign orders for capital goods collapsed by 60.3% saar. The German construction PMI reading in January was at a near-five year low of 33.7 versus 44.1 in December.

Stock and bond transactions in Japan generated a Y 1610 billion outflow last week.

The formerly most hawkish member of the BOJ, Atuchi Mizuno, is now calling for “extraordinary” central bank actions to combat Japan’s hard landing.

Business sentiment in South Africa fell to 82.4 in January from 83.8.  Such is near to a 6-year low.

Italian consumer price inflation fell to 1.6% last month and 2.3% on the core measure.

The Bank of Mexico intervened unexpectedly yesterday to support the peso. Indonesia’s government wants its central bank to target the sinking rupiah at 11000 per dollar.  Australia’s finance minister Swan said there is scope for more monetary easing.

CPI inflation in the Philippines fell in January to 7.1% from 8.0% in December.

Britain’s Halifax house price index unexpectedly rose 1.9% on month in January, but the 12-month drop increased to -17.2% from -16.2% in December. Such rose 4.5% in the year to January 2008.

British new car sales fell 30.9% in the year to January, the biggest January drop since 1974 during the OPEC I shock.

The Russian ruble breached its target floor marginally.

The U.S. will release factory orders, jobless claims, and productivity data. Canada releases its PMI and building permits.

Copyright 2009 Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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