New Overnight Developments Abroad: Chinese Data Solid, Ezone Industrial Output Weak

June 12, 2009

The dollar is ending the week on an up-note especially against commodity-sensitive currencies like the Canadian dollar (1.7%) and Australian dollar (1.2%). The greenback has also risen 0.9% against sterling, 0.7% relative to the yen, and 0.6% each against the euro and Swissy.

Sovereign bond yields are lower in North America, Europe, and Japan after a reassuring U.S. 30-year auction.  The 10-year JGB slid 4 basis points to 1.52%.

However, a Wall Street Journal article today claims the Fed will let long-term rates increase rather than boost its planned purchases of Treasuries and mortgage-backed securities.  The piece does not name its sources.

Asian stocks were mixed.  The Nikkei climbed 1.6%, and markets closed higher in The Philippines (2.7%), Sri Lanka (2.7%), Hong Kong (0.5%) and South Korea (0.7%).  But losses were registered in China of 1.9%, Taiwan of 1.8%, and India of 1.1%.

European bourses have traded down 0.8% in Britain, 0.4% in Germany and 0.1% in France.

Oil and gold settled back 1.5% and 1.2% to $71.56 per barrel and $950.70 per ounce.

Industrial production in the euro area posted a record 12-month drop in April of 21.6% and fell 1.9% from March.  Monthly declines amounted to 2.1% in Germany, 2.6% in The Netherlands, 3.4% in Finland, 1.4% in France, and 2.1% in Greece.  Production in the 16-nation bloc was 3.7% below the 1Q level after having tumbled at annualized rates of 27.7% in 1Q09 and 23.5% in 4Q08.

French consumer price inflation on an on-year basis sank below zero for the first time since 1957 on a national data basis and since at least 1996 on a standardized European basis.  The CPI in May firmed 0.1% on month but fell 0.3% from May 2008.  Core inflation firmed 0.1% m/m and 1.6% year-over-year.

Japanese industrial production was revised up 0.7 percentage points to a monthly gain in April of 5.9%.  Output had plunged 38% at a seasonally adjusted annual rate in 4Q08 and by 63.2% saar in 1Q09, so the year-over-year comparison in April was still very weak at minus 30.7%.  The inventory ratio in April dropped 4.7% from March but rose 41.1% in from a year earlier.  Capacity usage increased 10.2% in the month but was down 35.5% from April 2008.  Capacity slid 1.3% m/m and by 1.0% from a year earlier.

Japanese consumer confidence increased 3.3 points to a 14-month high of 35.7 in May.  All sub-components improved.  The overall index had bottomed in December at 26.2 and had registered an average quarterly print of 27.3 in 1Q09, 28.0 in 4Q08, 31.0 in 3Q08, and 33.9 in 2Q08.

Chinese industrial production posted a 12-month increase of 8.9% in May, compared to an expected rise of 7.7% and following gains of 7.3% in April and 8.3% in March.  The increase in May was inflated by 0.6 percentage points because of earthquake-depressed weakness in May 2008.

Chinese new bank lending soared 108.6% in the year to May, creating some concern about overheating.  M2 rose 25.7% from a year earlier.

Chinese nominal retail sales increased 15.2% in the year to May, a bit more than forecast and above April’s 14.8% on-year gain.

Industrial production in India, which had been forecast to dip marginally in the year to April, instead rose by 1.4%, and the drop in the year to March was revised downward by 1.6 percentage points to 0.75%.

Retail sales in New Zealand increased 0.5% in April, the second rise in three months and a somewhat bigger advance than assumed.

Hong Kong industrial production fell 2.9% last quarter and by 10.2% from the first quarter of 2008.  On-year producer price inflation in Hong Kong swung from plus 3.9% in the final quarter of 2008 to minus 1.4% in the first quarter of 2009.

Yesterday’s official Canadian budget update revised the projected deficit for fiscal 2009/10 upward by 49% to C$ 50.2 billion, with assumed growth of 17% in spending along with a 5.6% drop in revenue. The new estimate exceeds the prior record gap of 1992 by some 29%.

Scheduled U.S. data today includes the U. Michigan consumer sentiment index and import prices.  Treasury Secretary Geithner will be speaking today, as also will ECB President Trichet.

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


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