New Overnight Developments Abroad: Reacting to China Data And Awaiting U.S. Retail Sales

December 11, 2009

The yen has retreated 0.6% against an otherwise mixed dollar.  The greenback has risen 0.3% against the kiwi and 0.2% versus the Aussie dollar but edged 0.1% lower against sterling, the Swiss franc, and euro.

The Japanese Nikkei jumped 2.5%.  Stocks also gained 1.3% in Indonesia and Thailand, 0.9% in Hong Kong, and 0.6% in Australia.  European bourses have traded up with the German Dax, British Ftse and Paris Cac showing rises of 1.2%, 1.0%, and 0.7%.

Ten-year JGB, bund and Treasury yields are up 4, 3, and 2 basis points.

Gold rose 1.4% to $1141.70 per troy ounce, and oil prices are 0.7% higher at $71.03 per barrel.

Chinese November data are mixed relative to expectations but on the whole again very impressive.

  • Bank lending of 294.8 yuan surpassed forecasts of yuan 250 billion and October’s yuan 253 billion total.
  • M2 posted a record 29.74% on-year increase.
  • Industrial production increased 19.2% in the year to November, accelerating from October’s 16.1% and exceeding forecasts of 18%.
  • But retail sales gained 15.8% in the year to November, down from 16.2% y/y in October and below forecast growth of 16.5%.
  • Fixed asset investment growth of 32.1% was also a bit below forecasts of 33.2% and October’s print of 33.1%.
  • The trade surplus narrowed 20.4% to $19.1 billion.  Analysts expected a surplus of slightly over $24 billion.  Exports fell 1.2% on year instead of rising as forecast, and import growth of 26.7% surpassed forecasts.
  • Consumer price inflation reverted to the black for the first time since January, printing at +0.6% on year versus negative 0.5% in October.
  • PPI inflation was negative 2.1% as expected compared to on-year drops of 5.8% in October and 7.0% in September.

Late yesterday came news that central bank rates in Peru and Chile were held steady as expected at 1.25% and 0.5%, respectively.  See reviews.

Keen interest exists over today’s U.S. retail sales report, where a 0.6% monthly increase is expected.  Consumer spending is the biggest component of aggregate U.S. demand by far.  The U. Michigan index of consumer sentiment, import prices, and business inventories are other scheduled U.S. data releases today.

Industrial production in India accelerated only slightly to an on-year advance of 10.3% in October from 9.6% in September.  Analysts had looked for 12.0% and wonder if this more moderate acceleration might postpone the first RBI rate hike beyond January.

Credit rating concerns persist.  On the heels of negative outlook calls for Spain and Portugal and Greece’s downgrade to BBB+, Moody’s said that public finances have worsened in the United States and Britain.  Rumors in Britain are that Prime Minister Brown may have vetoed suggested budget cuts.   In Japan, where debt is pressing 200% of GDP, Prime Minister Hatoyama conceded that bond issuance may surpass earlier intentions.

Japanese consumer confidence sagged below 40 to a four-month low of 39.5 in November from 40.5 in October, 40.7 in September and 40.4 in August.  A Nikkei press survey indicated that winter bonuses are likely to be 14.8% lower than last year.

British producer output prices firmed 0.2% and accelerated to a 12-month 2.9% rate of rise from 1.9%.  The increase reflected energy.  Core PPI-O inflation eased to 2.0% from 2.2% in October and posted a 0.1% monthly dip.  Producer input price inflation rose to a yearly high of 4.0%.

Irish retail sales firmed 0.3% in October, trimming the 12-month rate of drop to 9.1% from 9.8%.

Russian GDP fell 8.9% in the year to 3Q09, less than the 10.9% drop in the year to the second quarter.

Romanian CPI inflation accelerated to 4.65% from 4.3% in October, the first rise in nine months.  The CPI advanced 0.7% on the month.  Hungarian CPI inflation likewise climbed to 5.2% from 4.7%.  The Czech current account swung to a CZK 12.4 billion surplus in October from a CZK 5.87 billion deficit in September.

Canadian house prices are scheduled today. 

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


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