New Overnight Developments Abroad: Stress Tests and Swine Flu Spread Fear

April 28, 2009

The World Health Organization declared the swine flu epidemic uncontainable.

The Wall Street Journal claims the government has asked Bank of America and Citigroup to raise more capital based on stress test results.  Bank shares lead a decline in stock markets.  The Nikkei fell 2.7%, and the German Dax, Paris Cac, and British Ftse are off 2.5%, 2.3%, and 1.9%.  Share prices fell 3.0% in South Korea, 1.9% in Hong Kong, 3.3% in India, and 1.1% in the Philippines.

The kiwi and Australian dollar plunged 1.8% and 1.2% against their U.S. counterpart, but the Canadian dollar has lost just 0.4%.  Oil fell 2.9% to $48.67/barrel, and gold is 1.0% lower at $899.00 per ounce.

The dollar lost 0.5% against the yen but rose 0.5% against sterling, 0.3% against the euro, and 0.1% relative to the Swiss franc.

Sovereign bond prices are higher in Europe, North America and Asia.  The yield on 10-year JGB’s fell 4 basis points to 1.415%.

Large-store Japanese retail sales posted an 8.1% on-year decline in March, same as in February, and fell 4.2% in fiscal 2008.  Total retail sales dropped 3.9% in the year to March, 4.0% y/y in 1Q09, and 1.1% in FY08.

Based on four state reports, German CPI inflation had a somewhat higher-than-expected on-year increase in April. Results ranged from 0.3% in Hesse to 0.8% in North Rhine Westphalia.  On-month inflation remained very low.

Business sentiment in Italy improved more than assumed in April to 64.2, and the print in March was revised up to 60.9 from 59.8 reported a month ago. Italy recorded its first trade surplus with non-EU markets in two years, a surplus of EUR 176 million in March.  Both exports and imports fell on month and on year.  Italian retail sales fell 0.7% in February and by 3.1% from February 2008, with weakness most concentrated in non-food stores.

A media report out of China claimed that monetary policy is unlikely to change despite very robust growth in bank lending.

consumer sentiment in South Korea recovered sharply in April to 98, highest since 2Q08, from 84 in March.  Minutes reveal there was one dissenting vote in favor of another Bank of Korea rate cut in March.  The vote was 5-1 to leave the 2.0% key rate unchanged.

When Poland‘s central bank cut rates by 25 basis points in February, 3 of 10 policymakers preferred no change.

Unemployment in Hungary climbed to 9.7% in 1Q09 from 8.0% a year earlier.  Unemployment in Finland increased to 8.3% in March.

French housing starts plunged by 19.2% in the year to March and by 33.8% y/y in 1Q08.  French consumer confidence rose to -41 in April, and the March figure was revised up a point to -42.

Swedish retail sales dipped 0.1% in March and fell by 1.7% from a year earlier. Swedish producer prices jumped 1.0% in March and by 4.8% from March 2008 due to krona weakness.  Both reports showed more strength than expected.

The CBI monthly survey of British retailers indicated very surprising improvement in April, as the index leaped to +3 from -44.  Such was a 15-month high.

The Swiss consumption index rose to 0.99 in March from 0.89 in February.  The outlook remains gloomier than current conditions.

Mortgage lending in Spain fell 47.5% in the year to February.

U.S. data today include the Case-Shiller index of house prices, the Richmond Fed index, and consumer confidence.  The FOMC begins a 2-day meeting.

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


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