New Overnight Developments Abroad: Many PMI Readings and Japanese Tankan Survey Released

July 1, 2009

Currencies reflect less risk aversion.  Dollar rose 0.6% against the yen but is otherwise down 0.6% against the C-dollar, 0.4% against the euro, 0.3% against the Swissy, and 0.1% against the Aussie dollar.  The dollar also rose 0.4% against the kiwi but is unchanged against sterling.

Stocks are mixed.  There have been gains of 2.3% in China and Taiwan, 1.6% in South Korea and Indonesia, 1.8% in France, 1.6% in Germany, and 1.4% in Britain.  The Japanese Nikkei eased 0.2%, and stocks fell 2.1% in Australia, 0.8% in Hong Kong, and 0.6% in New Zealand.  Futures indicate a likely rise at the U.S. open.

Oil firmed 1.7% to $71.11 per barrel, and gold gained 0.4% to $931.30 per ounce.

10-year gilt and bund yields firmed two basis points, while the comparable JGB slid a basis point to 1.35%.

The Bank of Japan quarterly business survey (aka Tankan) did not improve as much as hoped.  Big firm diffusion indices printed at minus 48 and minus 29 for manufacturers and non-manufacturers, but more improvement is seen by September.  Sales and profit expectations in the current fiscal year got revised downward, and planned investment was trimmed.  See review.

Japanese motor vehicle sales recorded a 12-month drop of 13.5% last month after drops of 19% in May and 29% in April.

The flash estimates for June manufacturing PMI readings for Euroland, Germany, and France were revised higher to 42.6, 40.9 and 45.9.  They were respectively 1.9, 1.3 and 2.6 points above their May scores.  Other announced Continental European PMI’s in manufacturing rose to 42.7 from 41.1 in Italy, 42.8 from 39.8 in Spain, 47.7 from 46.1 in Greece, 42.5 from 39.4 in Ireland, 41.9 from 40.5 in the Czech Republic, 43.0 from 42.5 in Poland, 47.3 from 45.3 in Russia, 50.5 from 43.7 in Sweden, 41.8 from 39.8 in Switzerland, and 45.8 from 45.4 in Hungary.  The Dutch score of 44.4 was an 8-month high.

Britain’s PMI-manufacturing reading was 47.0, above an expected 46.0 and May’s 45.4 score and also the highest since May 2008.  The British services index recorded the smallest drop, just 0.1%, in six months during April.

German real retail sales posted an unexpected third consecutive rise in May, an increase of 0.4% after upticks of 0.5% in April and 0.2% in March.  Retail sales in April/May were 0.8% above the 1Q level.  May sales were still 2.9% below the May 2008 level, in part because of fewer working days in the month.

Other PMI announcements were readings of 53.9 in Turkey, best since September 2006, 55.3 in India after 55.7 in May, 38.4 in Australia after 37.5, 53.2 in China versus 53.1 in May, 47.1 in Hong Kong after 44.8, 48.2 in Japan, up 1.6 points and at a 14-month high, 37.9 in South Africa after 37.3, and 47.0 in Brazil versus 45.4 in May.

Canada is closed today for Canada Day.

South Korean consumer prices edged 0.1% lower in June, cutting the 12-month increase to 2.0% from 2.7% in May.  That economy accrued a record $7.4 billion trade surplus in June, as imports (down 32.3%) plunged much more deeply than exports (off 11.3%).  The drop in exports was the smallest of 1H08.

Australia announced mixed data.  Retail sales jumped 1.0% in May, twice as much as forecast and the third consecutive increase.  But building approvals dropped 12.5% in May after gains of 8.7% in February, 6.3% in March and 5.1% in April.  Approvals fell 22.4% from May 2008.

ADP private employment, the manufacturing PMI, motor vehicle sales and construction spending figures get reported in the United States.  Weekly oil inventories also get reported.  U.S. employment arrives tomorrow, not Friday.  Chicago Fed President Evans speaks.

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


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