New Overnight Developments Abroad: Commodities and Equities Higher, Bond Prices and Dollar Lower

October 19, 2009

The dollar has lost 0.9% against the kiwi, 0.7% relative to the Australian dollar, 0.4% against the Swiss franc, 0.3% versus the Canadian dollar and 0.2% against the yen and euro.  The greenback is 0.3% stronger against sterling.  Speculation persists that Beijing may soon let the yuan rise again.  A story in Barrons urges the Fed to begin raising rates sooner rather than later.

Ten-year Treasury, bund, gilt, and JGB yields are somewhat higher.  The high/low range on sovereign debt yields in the U.S., Canada, Germany and Britain is only 32 basis points wide.

Stocks in Asia closed mixed but mostly higher, with gains of 2.7% in China, 1.2% in Hong Kong, 2.0% in Thailand, 0.5% in South Korea but minus 0.2% in Japan.  Stocks lost 0.9% in Australia but are 1.3% higher in South Africa.  The German Dax, Paris Cac and British Ftse are trading 1.3%, 1.2%, and 1.1% higher.

November oil is off 0.4% after touching a one-year high of $79.05.  December oil got as high as $79.29 per barrel.  Gold rose 0.4% to $1056.10 per ounce.

Following a quarterly meeting of branch managers, the Bank of Japan released a regional economic report showing improvement in all nine regions led by Tokai.  Governor Shirakawa said financial conditions are more stable but urged caution regarding the economic outlook.  Minutes from the central bank’s September interest rate policy meeting were also released, indicating a lessening need for extra credit support for corporations.

The British Rightmove house price index leaped 2.8% in October and posted a tiny on-year uptick of 0.2% after falling 1.5% in the year to September.

Fed Chairman Bernanke again urged action on financial policy reform.

Phil Lowe, Assistant Governor of the Reserve Bank of Australia, said his economy will benefit from strengthening Asian demand and that policy will become more mindful about containing inflation as economic recovery progresses.

ECB Governor Smaghi said lending to firms may fall further in the near term but will improve next year.

A story in the London  Sunday Times said Bank of England policy maker Adam Posen is inclined to favor an extension of the asset purchase plan.  A different story last week quoting Paul Fisher had suggested the central bank may pause the plan after November.

Hong Kong unemployment slid unexpectedly by a tenth to 5.3% in the third quarter, the first drop in over a year.

Japan’s tertiary index of service sector activity firmed 0.3% in August after rising 0.7% in July and was 0.9% higher in July-August than the 2Q level.  The tertiary index had fallen 2.9% at an annualized rate in the second quarter.

Canadian international transactions will be reported later today, and so will the housing index from the U.S. National Association of Home Builders.  The third-quarter season for corporate earnings announcements continues.  Hopeful investors are bidding stocks higher in anticipation of upbeat figures.

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


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