Fresh Worries Over Greek Debt Problems

March 18, 2010

The euro fell 0.5% against the dollar as a German government officials expressed reservations about giving direct aid to Greece and suggested that maybe Athens should instead seek help from the IMF.  Greek PM Papandreou urged fellow EU governments to lend a hand.

The Swissy moved in lock-step with the euro, and the dollar also gained 0.4% against the Australian currency.  Other dollar moves have been inconsequential: up 0.2% versus sterling and 0.1% against the Canadian dollar, down 0.2% against the yen and 0.1% relative to the kiwi.

The 10-year JGB yield firmed two basis points to 1.38% a day after the BOJ doubled its fixed-rate operations of short-term finance, a move intended in part to hold down long-term rates.  German bund and British gilt yields are steady.

A day after OPEC left its production quotas unchanged, oil has slid 0.6% to $82.40 per barrel.  Gold is 0.1% softer at $1123.10 per ounce.

Euroland’s current account took a big turn for the worse, swinging to a seasonally adjusted deficit of EUR 8.1 billion in January from a EUR 2.3 billion surplus in December.  The EUR 49.8 billion deficit in the twelve months to January compared favorably to a shortfall of EUR 144.2 billion in the previous 12 months.

British M4 growth continued to decelerate in February, dropping to an on-year increase of 3.6% from 4.9% in January, 6.4% in December 9.3% in November, 14.4% last July and 18.6% in February 2009.  Mortgage approvals of 48K in February were the same number as in January and 11% less than forecast.  The U.K. public-sector net borrowing requirement of the government ballooned to Gbp 12.4 billion in February from Gbp 0.43 billion in January — usually a repayment month — and Gbp 8.8 billion in January.  Opinion polls showed the Conservatives lead widening again.  Elections must be held by June.

The British monthly CBI survey of businesses in March produced more disappointing results than anticipated.  The orders index of minus 37 was five points worse than forecast and a point below February’s outcome.  Output expectations also slid to 5 from 7.

Italy’s trade deficit doubled in January from December to EUR 3.4 billion.

Swiss industrial output jumped 6.4% last quarter, beating forecasts, and was just 1.1% lower than a year earlier.  The Swiss trade surplus narrowed to Chf 1.29 billion in February from Chf 2.42 billion in January.  The ZEW index of investor sentiment toward Switzerland increased 1.3 points to 53.8 in February.

Australian housing starts shot up 15.1% last quarter, but an index of household financial conditions fell to 28.8 in March from 34.5 three months earlier, breaking a streak of improvement.

In Japan, the Reuters Tankan manufacturing index of minus 8 in March versus minus 27 last April points to sharp improvement in the Bank of Japan Tankan survey due April 1st.  Japan’s index of leading economic indicators rose to a 30-month high of 96.7 in January from 94.7 in December.  The coincident index struck an 18-month high of 100.1.  Japanese commercial land prices fell more steeply in 2009 (6.1%) than in 2008 (4.7%) and to their lowest level since at least 1974.

Hong Kong unemployment averaged 4.6% in December-February.  Swedish joblessness was 9.3% last month and 9.1% seasonally adjusted.  The Dutch unemployment rate in February was 5.7%.  Dutch consumer confidence improved a point to minus 12 in March and was 21 points better than a year earlier.

Late yesterday came word that the Central Bank of Brazil Selic interest rate was being left at a record low of 8.75%.  Some analysts anticipated a rise, and the vote was split 5-3.

Sri Lanka’s central bank left its key repo and reverse repo rates unchanged at 7.5% and 9.75%, respectively, as was expected.  Those levels represent a 5-year low.  Interest rate decisions are upcoming too from Chile and Turkey.

The United States today releases data for monthly consumer prices and the Philly Fed index, quarterly current account, and weekly jobless claims.

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



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