New Overnight Developments Abroad: Monday Market Action Reversed Partially

August 18, 2009

There is less observable risk aversion than yesterday.  The dollar and yen are lower, stocks are mostly higher, commodities are up, and so are bond yields.

The dollar has advanced 0.7% against the yen but shows losses of 0.6% against sterling, 0.4% against the Australian and New Zealand dollars, 0.3% against the euro and 0.2% against the Canadian dollar.  The Swiss franc is steady against the dollar.

Stocks recovered 1.6% in India, 1.3% in Thailand, 1.2% in Sri Lanka, 0.9% in Singapore, 0.8% in Hong Kong, and 0.2% in Japan.  In Europe, the British Ftse, Paris Cac and German Dax show gains of 0.7%, 0.6%, and 0.5%.

Oil and gold are 1.0% and 0.5% higher at $67.45 per barrel and $939.50 per ounce.

The ten-year JGB yield is 1 basis point higher at 1.36%, and comparable gilt and bund yields have risen 4 basis points each.

The ZEW index of German business confidence climbed to 56.1 in August, best since April 2006, from 39.5 in July, 44.8 in June and 13.0 in April.  This was a much greater improvement than forecast.  The current conditions component also improved with a print of minus 77.2 after minus 89.3.  The ZEW indices for Euroland climbed to 54.9 on the expectations component from 39.5 and to minus 82.1 on current conditions from minus 90.7.

British consumer price inflation failed to drop two-tenths further in July as expected but instead held steady at 1.8%, which is still its lowest since February 2005.  Core CPI of 1.8% on-year, up from 1.6% in June, was at an 8-month high.  RPI. RPIX, and RPIY inflation each climbed two-tenths to minus 1.4%, 1.2%, and 2.1%.  In month-on-month terms, the CPI, RPI, RPIX, and RPIY indices were all unchanged in July.

Japanese department store sales recorded a 17% consecutive on-year decline, dropping 11.7% in the year to July versus -11.0% in the first half of 2009.  Tokyo department store sales fell 13.4% in the year to July after a drop of 11.4% in June.

South African real GDP fell 3.0% at an annualized rate in the second quarter, half as much as the 6.4% tumble in 1Q and a shade better than expected.

Swedish capacity utilization slid to 77.0% last quarter from 77.8% in 1Q and 90.2% in the second quarter of 2008.  Jobs fell 1.9% in 2Q09.

Factory sales in Malaysia advanced 6.7% in June but sank 25.5% from June 2008.

Construction output in Hungary rose 15.9% in the year to June but were 1.9% lower in 1H09 than a year earlier.

Minutes from the Reserve Bank of Australia’s policy meeting on August 4 signaled no urgency surrounding the timing of a first rate hike.  Officials want to be sure that economic recovery can handle such a step.  According to a Melbourne Institute quarterly survey, wage inflation accelerated to 4.1% y/y in August from 3.3% in May.

Hong Kong‘s jobless rate held at 5.4% in May-July from the average level in 2Q09.  The balance of payments of the Philippines posted a $506 million surplus in July, best since January.  The surplus nearly disappeared in 2008.

Later this day, the U.S. releases housing starts, housing permits and producer prices, while Canada reports security transactions with foreigners.  Turkey’s central bank is likely to cut its benchmark interest rate, and Chile announces GDP and current account data.

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


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