New Overnight Developments Abroad: Focus on Stress Test Results and ECB

May 7, 2009

Many big events today, headed by the U.S. stress test results for banks due at 20:00 GMT (much of which has been leaked already) but also the ECB at 11:45 GMT, and U.S. jobless claims, productivity and unit labor costs at 12:30 GMT.

The Bank of England unexpectedly increased its asset purchase program by another Gbp 50 billion and left its Bank Rate at 0.5%.

Japan reopened after Golden Week, with Nikkei jumping 4.6%, dollar/yen rising another 1.0%, and 10-year JGB’s advancing two basis points to 1.42%.

U.S. and European sovereign bond yields are sharply higher.  Ten-year Treasury is indicated at 3.23%.

Lessening risk aversion seen in dollar declines of 1.0% against the Australian dollar and 1.3% against the New Zealand kiwi as well as commodity prices gains of 2.6% in oil to $57.81 and 0.6% to $916.90 in gold.  Asia stocks mostly rose: Hong Kong 2.3%, Indonesia +1.7%, India +1.4%, and Vietnam +3.9%.  In Europe, the British Ftse, Paris Cac, and German Dax are trading up 2.5%, 1.8%, and 1.6%.

German industrial orders leaped 3.3% in March, unexpectedly breaking a 7-month slide that still saw orders plunge 46.6% saar in 1Q09 after dropping 52.6% saar in the fourth quarter of 2008.  The increase in March was paced by a 9.1% jump in foreign orders for capital goods.

Australian and New Zealand labor market reports were better than forecast.

  • Australian jobs increased 27.3K in April, turning around from a 37.2K drop in March, and the jobless rate settled back to 5.4% from a 5-year high of 5.7%.
  • New Zealand’s unemployment rate rose from 4.7% in 4Q08 to a lower-than-expected 5.0% in the first quarter of this year.

South Korean reserves posted their biggest monthly rise ($6.14 billion) since January 2006 in April.

Australia’s April construction PMI reading improved to 36.5 from 30.3 in March.

Growth in Japan’s monetary base accelerated to on-year growth of 8.2% in April from 5.7% in 1Q09 and 1.7% in 4Q08.  Reflecting quantitative easing by the Bank of Japan, bank balances at the BOJ soared 81.2% in the year to April versus a 6.0% drop in calendar 2008.

Iceland’s central bank slashed its key interest rate by 250 basis points to 13.0% in a third easing.  The bank had cut its rate by 150 bps on April 8 and 100 bps on March 19.  Inflation is easing (11.9%) and the Icelandic crown is more resilient in the wake of an IMF aid package last autumn that mandated a 600-bp rate hike to 18% on October 28.

The French trade deficit widened 18.4% between February and March to EUR 4.884 billion.  Exports and imports each tumbled in the first quarter.

British car sales sank 24% in the year to April.  Construction orders dropped 38% in the year to 1Q09.

Domestic exports in Hong Kong fell 44.4% in the year to 1Q09.  Taiwanese exports dropped by a larger-than-forecast 34.3% in the year to April.

Hungary’s industrial production recovered 4.3% in March but posted a 19.6% on-year decline that month.

Swiss consumer prices rose 0.9% in April, more than forecast, but still dropped 0.3% from a year earlier.  Greek on-year CPI inflation slowed to 1.0% in April from 1.0% in March.

Swedish industrial output and orders recorded on-year drops in March of 22.9% and 20.0%.

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


Comments are closed.