Greek Debt Fear Receding As EU Seen Moving Toward a Bail-Out

February 10, 2010

The dollar is narrowly mixed, with gains of 0.4% against sterling and 0.2% relative to the Australian and New Zealand dollars but drops of 0.3% against the Canadian dollar and 0.1% versus the Swiss franc.  Dollar/yen and Euro/dollar are steady.  Bini Smaghi of the ECB said the euro has weathered the crisis.

Stocks in the Pacific Rim rose 1.4% in China, 1.1% in Taiwan, 0.7% in Hong Kong, 0.4% in Thailand, 0.3% in Japan and 0.2% in Australia, but such fell 0.8% in India.  The trend is sharply upward in Europe, with the German Dax and Paris Cac up 1.4% and the British Ftse 1.1% higher.  Signs of a German-led aid package for Greece keep swirling, although no definitive details have been unveiled.  Big EU meeting tomorrow.

Ten-year bund yields are seven basis points higher at 3.22%.  The 10-year JGB slid a basis point to 1.34%.

Oil and gold prices firmed 0.4% to $74.22 per barrel and $1081.00 per troy ounce.

Japanese core machinery orders snapped back 20.1% in December, three times more than forecast, but their 0.5% increase in 4Q09 was still only half as much as officials had predicted three months ago.  A 2.0% increase in core machinery orders is projected for the first quarter of 2010.  In on-year comparisons, core private machinery orders  were 1.5% lower in December and down 14.0% in 4Q.  For full-2009 such recorded a 26.9% decline.  Foreign machinery orders also ended 2009 with a flourish, jumping 20.9% from November.

Japanese corporate goods prices advanced 0.3% in January, cutting the 12-month rate of decline to 2.1% from 3.9% in November.  Analysts had projected a 0.1% uptick in the CGPI.

South Korean joblessness rose to 4.8% in January.

China reported a January trade surplus of only $14.17 billion, well below expectations of $20 billion.  Imports were 85.5% greater than a year before, while exports posted a 21% advance.

Australian consumer confidence sagged 2.6% in February, a worse result than anticipated, but remained 15.2% higher than its long-term average score.  Aussie mortgage loans declined for a third month in a row, losing 5.5% in December.  Both pieces of released data reflect the impact of three central bank rate hikes in 4Q09.

Asia is clearly the world’s growth leader currently.  On-year GDP growth in India accelerated to 5.4% last quarter.  Malaysian industrial production in December was 8.9% greater than a year earlier.  Filipino exports in December were 23.6% higher than a year earlier.

Russia’s central bank decided not to cut interest rates further this month, defying the view of many pundits by choosing instead to peruse coming inflation data.

The Bank of England released a dovish quarterly inflation report that projects sub-target inflation in the medium term.  While the CPI has recently spiked and is likely to crest this quarter at 3.3% because of the recent VAT hike, officials envisaged such then falling to only 0.9% in the year to 1Q11.  Projected GDP growth was reduced, and Governor King said it is far too soon to rule out the possibility of more gilt purchases by the central bank in the future.

British industrial production rose 0.5% in December and posted a smaller 3.6% on-year decline.  Factory output increased 0.9% and fell only 1.9% from December 2008.  Analysts had predicted smaller gains from November.

French industrial production slid 0.1% in December and 2.3% from the end of 2008.  Factory output was 0.8% lower than in November and down 2.0% from a year earlier.  Italian industrial production fell 0.7% in December and 5.6% from December 2008.  Such posted a huge 17.5% decline in 2009 as a whole.  The French and Italian figures were each worse than expected.

Swedish industrial output, on the other hand, climbed 1.8% in December and recorded the smallest on-year drop (5.6%) in 15 months.  New industrial orders in Sweden fell 1.1% in the final month of 2009 as a 2.4% drop in foreign demand outweighed a 0.4% rise in domestic demand.  Orders rose 1.6% in 4Q09.  Sweden’s activity index is being discontinued.

Norwegian consumer prices firmed 0.2% in January and 2.5% from a year earlier.  The 12-month core CPI rate of increase was 2.3%.  Producer prices jumped 3.9% last month and gained 13.8% from January 2009.  Danish consumer prices firmed 0.3% last month and 2.0% on year, with a 12-month core rate of 1.9%.  Portuguese consumer prices fell 0.5% in January and 0.1% from a year earlier.

The French current account deficit widened to EUR 3.6 billion in December from EUR 3.4 billion the month before.  Spanish home sales were 0.3% lower in December than a year earlier.  Finnish industrial output rose nearly 1% in December but was still 5.9% below the year-earlier level.

The second major snowstorm to hit Washington DC in less than a week has caused Fed Chairman Bernanke’s House testimony to be canceled today.  Scheduled U.S. data releases included trade figures and the monthly federal budget.  Canada is also reported monthly trades.

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



2 Responses to “Greek Debt Fear Receding As EU Seen Moving Toward a Bail-Out”

  1. Jimbo says:

    typo? –“bund” yields or is there such a thing as a bund that I don’t know about?

  2. larrygreenberg says:

    Oh, Jimbo!
    Just as US 10 year bonds are called Treasuries, their counterparts in Germany, Britain, and Japan are known as bunds, gilts, and JGBs.