German and Japanese Growing at Vastly Different Speeds

August 9, 2010

Monday has seen Asian and European equities move impressively higher, but the trend was not shared by Japan.  While the Nikkei lost 0.7%, stocks advanced 0.9% in Taiwan, 0.7% in India, Indonesia, and China, 0.6% in Australia and Hong Kong and 0.4% in South Korea.  The Paris Cac, British Ftse, and German Dax are up by 1.5%, 1.3% and 1.2%.

The U.S. dollar rose 0.3% against the kiwi, reacting to a disappointing New Zealand report on house prices.  The greenback also firmed 0.2% against the Canadian dollar and 0.1% versus the Swiss franc, but it is off 0.1% against sterling and the euro.  The U.S. dollar is unchanged against the Aussie dollar, the Chinese yuan and the yen.

Ten-year JGB and gilt yields slid by four and three basis points, whereas 10-year German bunds firmed one basis point. 

Oil prices climbed 1.2% to $81.67.  Gold is 0.3% and above $1200 per ounce.  Traders are watching the rising trend of wheat with great interest.

Germany and Japan released June trade and current account figures.

  • German seasonally adjusted exports jumped 3.8% on month after a 7.9% leap in May.  Exports were 11.9% greater than in April.  The seasonally adjusted trade surplus of EUR 12.4 billion was near the 2Q monthly average of EUR 12.1 billion.  The unadjusted current account surplus in the first half of 2010 was EUR 57.8 billion, 24.8% wider than a year earlier.
  • Seasonally adjusted Japanese exports slid 0.6% on month and were 1.0% lower  than in April.  The unadjusted June current account was 47.3% wider in 1H10 than in 1H09, but June’s current account surplus of Y 1047 billion was 18.1% smaller than a year earlier and also narrower than such had been in May or April.

Japanese on-year M2 expansion slowed to 2.7% in July from 2.9% in June and 3.0% in the second quarter.  M3 slowed to 2.0% from 2.2% in June and 4.1% in 2Q.  Bank loans posted a smaller on-year drop of 1.9% last month.

Japan’s Economy Watchers index improved in July by more than assumed, printing at 49.8 after 47.5 in June.  The latest reading matches April’s high.  However, the Economy Watchers future outlook index dropped 1.7 points to 46.6.

Japan’s finance minister called recent currency moves excessive and conditions disorderly.  The latter characterization is not accurate.

China bought much less Japanese sovereign paper in June than May.  Taiwan reported on-year growth of 38.5% in exports and 42.7% in imports in July.

Back in Germany, real manufacturing sales posted on-year growth of 10.7% in June and 9.9% in the first half.

Australian home loans fell 3.9% in June, twice the expected decline of 2.0%.  Lending to companies dropped 3.9% in June.  Australian job ads rose 1.3% in July and were 35.1% greater than a year before, their largest on-year advance since November 2007.  Opinion polls suggest that Aussie elections on August 21 could end up with no major party securing a majority.

South Korean producer prices firmed 0.1% in July from June but were 3.4% higher than a year earlier.

Turkish industrial production rose 2.2% on month and 10.2% on year in June, down from 12-month advances of 15.6% in May and 17.3% in April.

The Sentix measure of Euroland investor confidence rebounded sharply to a +8.5 reading in August from minus 1.3 in July.  Analysts were looking for only about half as much improvement.

The Bank of France business sentiment index was flat at 101 in July, the same reading as in June and May.  The central bank expects French GDP to rise 0.3% not annualized in the third quarter.

Greek industrial output fell 4.5% between June 2009 and June 2010.

Czech consumer prices in July firmed 0.3% and were 1.9% above a year earlier.  The 8.7% jobless rate last month was as expected.

Singapore on-year GDP growth in the first half of 2010 was revised to 17.9% from 18.1% reported originally.

Market attention is focused on the FOMC statement due tomorrow.  One reason from the dollar’s recently softer tone is the possibility the Fed may announce new quantitative easing.  Certainly the economic assessment will be downgraded.  No significant U.S. data are scheduled today, but Tuesday will bring several economic releases as well as the Fed’s latest decision.

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

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