Awaiting U.S. GDP Today, Next Tuesday’s Election, and QE2 Announcement on Wednesday

October 29, 2010

On this last trading day of October, new concerns about Greece and other Ezone peripherals have depressed the euro by 0.7% against the dollar.  The greenback also gained 0.7% against the Australian dollar, 0.5% versus the Swiss franc and 0.2% against the Canadian dollar and sterling.  The dollar lost 0.2% against the yen and yuan, however, and is off 0.1% versus the kiwi.

The Japanese Nikkei slumped 1.8%.  Stocks also fell by 1.4% in South Korea, 0.8% in Taiwan and 0.5% in Australia, China and Hong Kong.  North Korea fired shots near its border with South Korea.  In Europe, the Paris Cac, British Ftse, and German Dax have traded 0.5%, 0.4% and 0.2% lower.

Ten-year British gilt and German bund yields slid by four and two basis points, while JGBs moved two basis points higher, trimming yesterday’s sizable decline.

Oil and gold prices fell by 0.9% and 0.4% to $81.44 per barrel and $1337.50 per ounce.

Several Japanese economic indicators were released.

  • Unemployment slipped to 5.0% in September from 5.1% in August, 5.2% in July, and 5.3% in June.  Jobs were 0.2% higher than a year earlier, and the job ratio edged up to 0.55 from 0.54.
  • Real household spending fell 0.4% on month in September but climbed 6.8% annualized between 2Q and 3Q.  Spending in September was unchanged from a year earlier, while incomes posted a 1.5% on-year advance.
  • Consumer prices rose 0.3% on month and fell by a smaller 0.6% on year in September.  Core inflation was negative 1.1%.  Consumer prices excluding energy as well as seasonal food posted a 0.6% on-year drop.  Seasonally adjusted consumer prices in Tokyo jumped by 0.6% in October and were 0.3% higher than a year earlier.
  • Industrial production declined 1.9% last month and are forecast to fall 3.6% in October.  Output was 11.1% greater than in September 2009 but 1.5% lower than the average 3Q10 level.
  • The manufacturing purchasing managers index worsened to 47.2 in October from 49.5 in September, 50.1 in August and 52.8 in July.  The October reading implies the fastest rate of contraction since May 2009.  Export orders printed below 50 (meaning contraction) for the first time in 17 months.
  • Housing starts posted a 17.7% on-year increase in September after a 20.5% rise in August.
  • But new construction orders reported by the 50 largest contractors were 15% lower than a year earlier.
  • Motor vehicle output was 11.4% greater in September than a year before.

South Korean industrial production fell 0.4% in September and posted a 3.9% on-year rise that was about half of what analysts were predicting.

Private sector credit in Australia edged up 0.1% last month and was 3.3% higher than a year earlier.  Broad money rose 0.3% on month and 5.4% on year.  New home sales slumped 14% in the third quarter, reflecting the squeeze of six earlier rate hikes in Australia, but showed signs of stabilizing in September.

New Zealand building permits fell 2.6% in September.  New Zealand had a NZD 378 trade surplus last quarter, the third quarterly black-ink result in a row.

Unemployment in Singapore slid to 2.1% in the third quarter from 2.2% in 2Q.  Producer prices in September were 2.9% lower than a year earlier.  Business sentiment in Thailand improved to 50.6 in September from 50.3 in August.

The preliminary CPI inflation rate in the euro area was 1.9% in October, up a tenth from September and right in line with the ECB target.

Euroland unemployment ticked up to 10.1% in September after printing at 10.0% each month from March through August.

Russia’s central bank left its refinancing rate at 7.75% as analysts had anticipated.

German retail sales volume slumped 2.3% last month and was only 0.4% above the September 2009 level.  Analysts had projected a small increase.  Sales in 3Q were 0.2% higher than in 2Q.

British consumer confidence ticked up a point to minus 19 in October instead of dropping two points as forecast.  U.K. mortgage approvals of 47.474K in September exceeded expectations of 46K.  Net consumer lending also surpassed forecasts, while net mortgage lending was less than expected.  Revised M4 in September was 0.2% lower than in August and 1.0% higher than a year earlier.

Switzerland’s index of leading economic indicators improved to 2.21 in October from 2.18 in September.

Italian consumer prices rose 0.2% in October and 1.7% from a year earlier.  The Italian PPI also increased 0.2% on month but posted the largest on-year advance, 4.0%, since October 2008.  Italian unemployment firmed two- tenths to 8.3% last month.  Spain’s jobless rate averaged 19.8% last quarter. Norwegian retail sales in volume terms were 3.0% greater in September than a year before.

Investors get their first look at third-quarter U.S. GDP data, due at 12:30 GMT.  The U.S. employment cost index and the final U. Michigan consumer sentiment data also get released today, as do Canadian monthly GDP and producer prices.

Europe moves back to standard time this weekend.  Clocks in the United States do not get changed until the following weekend.  For next week only, the time difference between the two regions will be an hour shorter than usual.

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

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