New Overnight Developments Abroad: 2Q GDP Rose in Germany and France

August 13, 2009

Investor appetite for risk is higher after FOMC statement and European GDP data releases.  Dollar, yen, and sovereign yields are lower.  Stocks and commodities are higher.  Lots of U.S. data due later today.

The dollar edged 0.2% higher against the yen but slows losses of 1.1% against the Australian dollar. 0.8% against the kiwi, 0.7% relative to sterling, 0.5% against the euro and Canadian dollar, and 0.4% versus the Swiss franc.

Stocks closed up 0.8% in Japan, 2.1% in Australia, 3.5% in India, 2.1% in Indonesia, 1.7% in Singapore, 1.3% in Vietnam, 1.0% in the Philippines, and 1.3% in China.  In Europe, the Ftse is trading 1.3% higher, and the Dax and Cac40 show gains of 1.1% and 0.8%.

Oil and gold are up 2.0% and 0.7% at $71.56 per barrel and $759.10 per ounce.

Ten-year Treasury, Gilt, and Bund yields are each up 2 basis points.  The 10-year JGB yield of 1.42% is marginally lower, however.

Euro area GDP only dipped 0.1% in the second quarter, not 0.5% as forecast, following non-annualized declines of 0.4% in 3Q08, 1.8% in 4Q08 and 2.5% in 1Q09.  On-year growth fell 4.6%, somewhat less than the 4.9% drop in the year to the first quarter of 2009.  Investors are heartened that Euroland is emerging from recession sooner than thought.

  • French GDP increased 0.3%, as the contribution from net exports swung to positive 0.9 percentage points (ppts) from negative 0.2 ppts in 1Q.  Exports rose 1.0%, while imports fell 2.3%.  Consumption (0.4%) and government spending (0.5%) each rose, while investment fell 1.0%.  GDP fell 2.6% from 2Q08.
  • German GDP also rose 0.3%, its first increase since 1Q08.  Like France, a negative 0.2% growth rate had been anticipated.  GDP recorded an on-year drop of 7.1% (5.9% when adjusted for working day variations).  GDP had plunged 2.4% in 4Q08 from the third quarter and by 3.5% in the first quarter.
  • Italian real GDP dropped 0.5% and by 6.0% on year.
  • Belgian GDP fell 0.4% in the quarter and 3.8% from 2Q08.
  • Greece avoided two consecutive negative growth quarters, the technical conditions for a recession.  GDP firmed 0.3% but dipped 0.2% from 2Q08.
  • Portugal’s GDP advanced 0.3% and fell 3.7% in the year to 2Q, down form a 3.9% drop in the year to 1Q.
  • Dutch GDP took a big further hit, falling 0.9% and 5.1% from 2Q08.

Eastern European growth remained quite poor last quarter.  GDP in Hungary dropped 2.1% and by 7.6% from a year earlier.  Romanian GDP declined 1.2% from 1Q and 8.8% from 2Q08.  GDP in Cyprus fell 0.5% (-0.7% y/y).  GDP tumbled 12.3% in Lithuania and by 22.6% from 2Q08.  Latvian GDP declined 1.6% and 18.2% from a year before.

The Hong Kong Monetary Authority retained a 0.5% base rate as expected.  Policy is linked to what the Fed does to keep the HK$/USD peg steady.

Japanese stock and bond transactions generated a Y 214 billion capital inflow last week after a Y 172 billion outflow the week before.

The Swiss index of producer and import prices was slightly lower than forecast, holding steady in July and posting a 34-year record 12-month decline of 6.1%.

The just-published ECB August Bulletin projects weak regional growth in 2H09 but went to press before 2Q data had been announced.

Spanish consumer prices fell 0.9% in July and by 1.4% from a year earlier.  Core inflation softened to 0.6% from 0.8% in June.

Average weekly earnings in Australia rose 1.2% in the three months to May and by 6.1% from a year earlier.

Swedish industrial production and orders plunged 2.5% and 4.2% in June to yield 12-month declines of 20.8% and 21.3%.

U.S. data releases today include weekly jobless claims and monthly retail sales, import prices and business inventories.

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


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