Data Deluge on Last Day of Month and Week

April 30, 2010

The dollar eased mostly on month-end flows but also hopes that a Greek aid package will be fashioned soon.  The greenback lost 0.6% against the euro, Swissy and kiwi and 0.3% against the Canadian dollar.  It is unchanged against sterling, however, and up 0.5% versus the yen.  U.S. 1Q10 GDP data arrive later today.

Asian equities carried over the upbeat North American tone of Thursday, with rises of 1.6% in Hong Kong, 1.4% in Thailand, 1.5% in Indonesia, 1.2% in Japan (which was closed Thursday and will be so again next Monday through Wednesday), 0.8% in Malaysia, 0.8% in Sri Lanka, 0.2% in China and 0.5% in Australia.  In Europe, however, stocks have eased 0.4% in Britain and 0.2% in France, and the German Dax is up just 0.3%.

The yield on ten-year gilts softened two basis points, while German bunds and Japanese JGBs held steady.

Gold hit a four-month high and is 0.5% firmer at $1174.60 per ounce.  Oil is also up 0.5% at $85.63 per barrel.

The Bank of Japan

  • Retained a 0.1% overnight money rate target as expected.  It’s been at that level since December 2008.
  • Released a new Outlook for Economic Activity and Prices with fresh GDP forecasts of 1.8% in fiscal 2010 and 2.0% in fiscal 2011 and new core CPI projections of minus 0.5% in the present fiscal year and +0.1% in fiscal 2011.
  • Promised to keep an extremely accommodative financial environment to overcome deflation and return Japan to a path of sustainable growth with price stability, but asserted there’s no need for further easing since the impact of the accommodative stance will intensify naturally and the output gap will be lessening.
  • Warned about unprecedented debt and long-term headwinds from a shrinking population.
  • Ended a program of buying stocks from commercial banks, which had been initiated in February 2009.

Japanese unemployment ticked up to 5.0% in March from 4.9% in January and February.  Jobs posted an on-year decline of 0.6% after falling 1.3% in the year to February, and the job offers ratio continued to edge higher, climbing to 0.49 from 0.47 in February and 0.43 in December.

Japanese core CPI edged down 0.1% on month in seasonally adjusted terms and  fell 1.2% in the year to March, the same decline as in February.  The total CPI rate was minus 1.1%.  Tokyo consumer prices in the year to April fell by 1.9% on the core measure and by 1.5% overall.

Japanese real household spending shot up 5.7% on month in March seasonally adjusted following drops of 1.2% in January and 2.0% in February.  Spending was 4.4% greater than a year earlier, but real disposable incomes increased just 0.3% on year.

New data on Japanese housing starts and construction orders also outperformed expectations.  Starts fell 2.4% in the year to March, less than half as much as forecast and the smallest drop in five months.  Starts in February were 9.3% lower than a year before.  Construction orders in March were up 42.3% on year after posting a 20.3% decline in February.

Japanese motor vehicle output was 75.9% greater in March than a year earlier.  The manufacturing purchasing managers index rose to 53.5 in April from 52.4 in March.

Japanese industrial production, however, rose just 0.3% last month, half what analysts predicted.  Nonetheless production jumped 6.7% in the first quarter after a 5.9% advance in 4Q09 and was 30.7% greater in March than a year earlier.  The inventory ratio to shipments dropped 5.2% last month and by 28.3% from a year ago, which sets up a good trend for production in coming months.  In fact, businesses tell METI that they plan to boost output by 3.7% in April and reduce such by just 0.3% in May.  Despite these solid trends, industrial production fell 9.0% in the fiscal year to March 2010 as a whole.

New Zealand building permits slid 0.4% in March.  Australian private credit grew 0.5% in March and by 2.1% from a year earlier.  South African M3 growth accelerated more than forecast to 1.6% in March, but credit (minus 0.7%) posted a sixth straight on-year decline.

Further statistical evidence of Asia’s dynamic economy emergedSouth Korean industrial production increased 1.6% in March and by 22.1% from a year earlier.  Korea’s index of leading economic indicators edged up just 0.1%, while the coincident index rose by a more robust 0.8%.

Hong Kong M3 climbed 9.8% in the year to March.  Thailand’s business sentiment index improved to 55.7 in March from 51.3 in February, and Thai factory output in March was 32.6% greater than a year earlier.  Thailand posted a $1.7 billion current account surplus last month.  Singapore’s jobless rate was just 2.2% last quarter (3.2% among residents).

Unemployment in Euroland held steady at 10% in March, 0.9 percentage points than a year earlier, however.

The Flash estimate of on-year euro area CPI inflation in the euro area was 1.5% in April, up from 1.4% in March.

Euroland’s household savings rate edged down to 15.1% in 4Q09 from 15.2% in the third quarter of last year and 15.7% in 2Q.  Such still dwarfs the U.S. savings rate.

French producer prices firmed 0.6% in March and were 2.0% greater than a year earlier.  Italian producer prices rose 0.5% on month and 1.7% from March 2009.  The acceleration reflects upward trends in oil and other commodity costs.  Italian consumer prices rose 0.4% last month and by 1.5% from March 2009.

Swiss National Bank President Hildebrand said the danger of Swiss deflation has diminished but indicated a continuing commitment to prevent excessive franc appreciation against the euro.  The new franc comfort zone appears to be at 1.433 per euro.  The Swiss KOF index of leading economic indicators printed at 1.99 in April after 1.96 in March.

Spain’s jobless rate surpassed 20.0% last quarter with a print of 20.05%.  The Spanish current account deficit was EUR 6.6 billion in February, similar to January’s gap of EUR 6.5 billion.  Even as hopes arise that an aid package for Greece will get done next week, these poor Spanish numbers underscore the danger of continuing contagion.

Producer prices in Hungary were 3.5% lower than a year earlier in March. Norwegian credit grew 3.9% in the year to March, and that economy had unemployment of only 3.0% in April.

Scheduled U.S. data today feature the first estimate of GDP growth in 1Q10, the employment cost index, the midwestern PMI readings, The U. Michigan gauge of consumer sentiment, and the NAPM index.  Canada will be reporting monthly GDP, producer prices, and raw material price figures.

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



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