New Overnight Developments Abroad: Mixed Data Surprises
July 22, 2009
Sterling has weakened 0.4% against the dollar, which also gained 0.2% against the Australian dollar and 0.1% against the euro, Swissy, and kiwi. The dollar lost 0.2% against the yen and is unchanged against the Canadian dollar.
Asian stocks closed mixed: Japan +0.7%, China +1.9%, Malaysia +1.2%, the Philippines and Vietnam +0.7%, Sri Lanka and Taiwan +0.5% and South Korea +0.3%. But equities fell by 1.5% in India, 1.9% in Thailand, 1.3% in Hong Kong and 1.0% in Indonesia. European stocks are down, snapping a 7-day rally: Germany off 0.4%, France down 0.7%, and Britain off 0.2%. U.S. stocks likely to open lower.
Ten-year Gilt and JGB yields firmed by 3 basis points and 2 basis points.
Oil faltered 1.6% to $64.57 per barrel. Gold edged off 0.1% to $945.90 per ounce.
Euroland industrial orders had been projected to strengthen 1.9% in May because of Germany’s 4.2% advance but instead slipped 0.2%. Orders dropped 5.5% in Greece, 13.2% in Ireland, 4.6% in Spain and 0.5% in Italy. Consumer durables orders fell 1.5% in May, while demand for capital goods climbed 0.4%. April orders were revised to a drop of 0.7%, and orders in April-May combined were 1.1% less than the 1Q09 level.
French real consumer spending on factory goods, which had been projected to firm 0.4%, instead jumped 1.4% in June and 0.7% in the second quarter. The increases was led by a 3.0% June rise in household durables, while autos provided the main impetus for the 2Q increase.
The CBI monthly British industrial trends survey produced a weaker reading of minus 59 for orders in July after minus 51 in June. Analysts were expecting minus 45. Britain’s National Institute for Economic and Social Research cautioned that a recent rise in house prices is likely to be temporary and related to unavailable supplies. The NIESR projects a continuing price slump until 2012.
Australian consumer prices firmed 0.5% last quarter and 1.5% from 2Q08 as projected. Healthcare costs were up 2.3% in the quarter. Core CPI, which is targeted at 2-3%, continued to prove sticky on the downside, with the weighted median index edging down only to a 12-month pace of 4.2% from 4.4% and the trimmed mean index at 3.6% after 3.9% in 1Q09.
The Assistant Governor of Australia’s central bank, Debelle, said the economy is performing better than forecasts, thanks to effective monetary and fiscal policy support, and that growth risks have become more balanced. His remarks and the core CPI results have reinforced speculation that the Reserve Bank will not cut rates any further.
Minutes from the Bank of England July 7-8 meeting showed a 9-0 vote in favor of keeping the Bank Rate at 0.5% but deferring any change in the Gbp 125 asset purchase plan until the August quarter inflation report. That meant that quantitative easing this month would be slower than the pace of recent months. In an interview, Charles Bean, chief economist at the BOE, separately said that second-quarter growth was probably again negative and that its too early to tell the effectiveness of quantitative easing.
There’s been an investigation in Canada to see if CPI and labor market data this year might have been leaked early as many currency traders believe.
Japan’s senior loan officer survey by the Bank of Japan revealed sharply weaker loan demand in July than April.
Japanese supermarket sales fell 4.4% in the year to June and 3.7% in 1H09. Clothing sales sank 12.3% from a year earlier.
Taiwanese unemployment rose for a tenth consecutive month to 5.91% in June from 5.84% in May.
Malaysian consumer price inflation had a negative reading in June for the first time since August 1986. Such was minus 1.4% after plus 2.4% in May. Consumer prices firmed 0.1% on month.
Yamaguchi of the Bank of Japan implied that quantitative measures to alleviate corporate financing strains are likely to get extended beyond the end of 2009, saying that financial conditions remain generally tight.
The Czech finance minister revised projected 2009 growth to minus 4.3% from minus 2.3%, while Lithuania reported a 16.3% drop in industrial output in the year to June.
Fed Chairman Ben Bernanke presents the second phase of his Humphrey Hawkins testimony, this time before the Senate, later today. Yesterday, he underscored that policy would remain ultra-easy for quite a while longer. The U.S. FHFA house price index and weekly oil inventory data will be reported today. Canada releases retail sales at 12:30 GMT, and Brazil’s key Selic central bank rate is expected to be cut about a half-percentage point today.
Copyright Larry Greenberg 2009. All rights reserved. No secondary distribution without express permission.
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