New Overnight Developments Abroad: Consolidation

June 2, 2009

The dollar and sterling are somewhat lower.  The greenback lost 0.8% against the yen, 0.5% versus the Canadian dollar and Swiss franc, 0.3% relative to the euro and Australian dollar and 0.1% against the kiwi.  The dollar rose 0.3% against sterling.  UBS reportedly projects a drop of some 8% in EUR/USD over the coming 3 months.

Equities narrowly mixed after big Monday gains.  The Nikkei rose 0.3%, but the Paris Cac and British Ftse are trading 0.3% lower.  In the Pacific Rim, stocks rose 1.3% in The Philippines, 1.6% in New Zealand and Australia, 3.3% in Vietnam, and 0.2% in China, but they fell by 2.6% in Hong Kong, 1.0% in Thailand, and 0.2% in Singapore and South Korea.  Stocks are unchanged in Germany and Indonesia.

After a weakly subscribed 10-year Japanese government bond auction, the yield on such rose 3.5 bps to a 7-month high of 1.53% but settled partly back subsequently.

Oil prices fell 1.2% to $67.78/barrel after posting the highest close Monday since early November.  Gold retreated 0.5% to $974.70/ounce.

The Reserve Bank of Australia left its cash rate at a 49-year low of 3.0% but unexpectedly said such could drop further in the future if necessary because inflation will be easing.  Before the announcement, better-than-expected Australian data had been released.

  • The current account in 1Q narrowed 27.4% from 4Q08 and 77% from 1Q08.  Such will enhance quarterly GDP growth by 2.2 percentage points, suggesting that overall growth may have been positive, not negative, last quarter.
  • Building approvals jumped another 5.1% in April.  Their on-year drop was 16.1% versus a drop of 34% in the year to December.
  • Government spending slid 0.2% last quarter, weaker than thought.

The Euroland jobless rate increased another three-tenths to 9.2% in April.  Such stood at 8.2% at end-2008 and 7.3% in April 2008.

The global PMI-manufacturing reading compiled by J.P. Morgan improved 3.5 points to a 9-month high of 45.3 in April.

Japan’s monetary base rose 7.9% y/y in May, down from a 12-month gain of 8.2% in April but above the 1Q increase of 5.7% and the 2008 rise of 0.1%.

Swiss real GDP fell 0.8% last quarter, the most in almost 17 years but less than feared.  However, growth in 4Q08 was revised downward to -0.6%, and growth from 1Q08 was at negative 2.4%, worst since 1976.  Exports slumped 5.4%.  Construction and other investment fell by 1.0% and 0.4%.  Consumption firmed 0.1%, and public spending advanced 1.4%.  The GDP price deflator rose 1.1% in the year to 1Q09.

British M4 grew 17.4% in the year to April, down from 18.1% y/y in March.  According to Bank of England data, mortgage approvals (43.2) were somewhat higher than expected.  So was growth in consumer credit.  Total net lending jumped 86% m/m but fell 80% from a year earlier.  The CBI released results of its quarterly survey of corporate financial conditions, finding that credit has become less severely tight.

Norwegian consumer credit grew 6.6% in the year to April.  Sweden’s central bank projected big bank loan losses, but said such was manageable.

The Swiss PMI-manufacturing index improved sharply to 39.8 in May from 34.7 in April but remained well below the 50 breakeven point.

U.S. Treasury Secretary Geithner in China promised the budget gap will be lowered after the crisis and said Beijing officials approve U.S. policies.

South African motor vehicle sales dived 32.9% in the year to May and by 35.8% in January-May from a year earlier.

French producer prices fell much more than assumed in April, a drop of 0.9% and 6.4% from April 2008.

India’s trade gap narrowed 43% y/y in April.  The PMI reading widened to 55.7 in May.

The U.S. reports pending home sales at 14:00 GMT.  Other U.S. data today include weekly chain store sales and monthly auto sales.  Fisher of the Fed will be speaking.

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


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