Japanese Bank Lending Growth Sinks to Four-Year Low

February 8, 2010

The second week of February got off to a fairly quiet start.  The weekend meeting in Canada of G-7 finance ministers and central bankers did not release a formal statement.  Europeans attending that meeting made reassuring comments about the Greek government’s commitment to reducing its deficit.  U.S. Super Bowl won Sunday by New Orleans Saints was a distraction.

The dollar is unchanged against the euro, Swiss franc and Australian dollar.  The greenback strengthened 0.4% against the beleaguered pound, which slid below $1.5600 and shows gains of 0.2% relative to the yen and kiwi.  The yen is 0.2% firmer against the dollar.

Asian stocks suffered some scattered additional losses, with Japan’s Nikkei closing down 1.1% and below 10,000 for the first time since December 10.  Stocks fell 1.7% in Indonesia, 0.9% in South Korea, and 0.6% in Hong Kong.  In contrast, the Paris Cac, German Dax, and British Ftse have traded up 1.0%, 0.8%, and 0.8%.

The 10-year JGB yield is steady, whereas bund and gilt yields slid a little.

Oil and gold prices advanced 1.0% and 1.8% to $71.87 per barrel and $1071.50 per troy ounce.

Japanese bank lending fell 1.7% in the year to January, the biggest on-year decline since September 2005.  Twelve-month gains of 2.9% in M2 and 2.1% in M3 were lower than December on-year results and a bit below consensus forecasts.

The Japanese current account surplus of Y 901 billion in December was 453% wider than a year earlier but below expectations.  The Y 13.28 trillion surplus in 2009 was 18.9% smaller than the 2008 surplus.  Merchandise exports were 11.7% higher than a year earlier in December but plunged 34.3% in 2009 as a whole.  The seasonally adjusted current account and trade surpluses in December were 15.7% and 13.9% smaller than in November.  Seasonally adjusted exports ticked 0.2% lower on the month.  Direct and portfolio investment recorded outflows in December of Y 169 billion and 1.82 billion, resulting in a Basic Balance of negative Y 1.65 trillion.

Japan’s economy watchers index rose for a second straight time to 38.8 in January from 35.4 in December and 33.9 in November.  From a recovery high of 42.4 last June, such had declined for four consecutive months through November.  Stock and bond transactions in January generated a trivial Y 9.7 billion outflow.

The Bank of France measure of French business sentiment improved to 104 in January from 102 in December.

Dutch industrial production sank 2.2% in December, defying forecasts of a small increase.

Swiss real retail sales increased 4.7% between December 2008 and December 2009, three times more than anticipated and the largest on-year gain in 15 months.

The Euroland Sentix index of investor confidence worsened sharply in January to minus 8.2 from minus 3.7 in December.

The Czech trade surplus widened 128% in 2009 to CZK 153 billion.  Unemployment rose in January to 9.8%, most in five years, from 9.2% in December.  Turkish industrial output rose 0.7% in December and in posted a large 25.2% on-year increase from a year before not adjusted seasonally.

Home prices in New Zealand rose 1.7% on month and 4.4% on year in January.  New Zealand’s central bank governor called the economic recovery fragile.

Business sentiment in South Africa worsened to 81.2 in January from 83.5 in December.

Kuwait’s central bank reduced the discount rate for a sixth time since October 2008, cutting such by 50 bps.  The rates on one-week and one-month repos fell by 25 basis points each to 1.5% and 2.0%.

No meaningful U.S. data are scheduled for release today.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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