Japan to Buy EU-Guaranteed Irish Debt

January 11, 2011

The debt problems of Euroland peripherals and Australia’s floods remain in the forefront.

On the European debt issue,

  • Japanese Finance Minister Noda announced plans to purchase about a fifth of the upcoming EU-backed Irish debt issue as a means to promote reserve diversification.  China also plans to participate.  Japan’s announcement lifted EUR/JPY to as high as 107.9 from 107.05, but half those gains were given back.
  • Portugal’s finance minister again denied a need for a bailout.
  • Greece and Italy sold some short-term sovereign debt.
  • The former chief economist of the ECB, Otmar Issing, said the euro’s fate hinges on better fiscal discipline.

More flooding in Australia’s northeast has produced some deaths and more missing people.  The U.S. dollar climbed 1.1% against the Aussie dollar overnight and also gained 0.7% against the kiwi.

  • Australia’s trade surplus contracted 26.7% in November to AUD 1.925 billion with no growth in exports.  Aussie job ads rose 2.0% last month, exceeding forecasts after a 3.0% increase in November.
  • New Zealand business sentiment rebounded 3% last quarter, as that economy avoided a second dip into recession, but the recovery lacks real strength.  Building permits fell 2.6% in November, the fifth consecutive decline.

Elsewhere, the greenback shows gains of 0.4% against the yen and 0.1% versus sterling and the Swiss franc, but it has lost 0.2% against the Canadian dollar and 0.1% relative to China’s yuan.

The Nikkei slid 0.3% a day after markets had been closed for Coming of Age Day.  After Monday’s closing in New York, Alcoa announced somewhat better-than-forecast fourth-quarter earnings and revenues.  Other Asian stocks mostly rose, with gains of 1.3% in Taiwan, 1.0% in Hong Kong, 1.1% in Sri Lanka, 0.5% in China and 0.4% in Singapore and South Korea.  Australia’s market was unchanged.  In Europe, the British Ftse, Paris Cac and German Dax have traded up by 1.0%, 0.7% and 0.5%.

Ten-year Japanese JGB and British gilt yields eased one basis point, while their German counterpart has been steady.

Gold prices firmed 0.5% to $1380.90 per troy ounce, while oil eased 0.2% to $89.07 per barrel.

French industrial business sentiment improved to 108 according to the Bank of France’s monthly index from 107 in November, 104 in October and 102 in September.  Business sentiment in services also rose, climbing to 99 from 98 in November and 96 in the prior two months.  The central bank expects GDP to advanced 0.6% in 4Q10, twice as much as it grew in the prior quarter.

Japan’s index of leading economic indicators improved to a seven-month high of 101.0 in November from 97.7 in October.  The coincident index climbed 1.4 points to 102.1, but the index of lagging indicators continued to trend downward.

According to the British Retail Consortium, same-store retail sales slid 0.3% in December, the last month before a 2.5 percentage point hike in value added taxation.  A British Chamber of Commerce survey points to weaker economic growth of 0.4-0.5% last quarter.

Greek consumer prices rose 0.4% on month and 5.2% on year in December, accelerating from 4.9% in the year to November.

Czech retail sales on a working day-adjusted basis fell 0.3% in November but advanced 3.4% on year.

Turkey’s current account deficit was 64% larger in November than October.

South African factory production rose 2.5% on month and 4.6% on year in November, beating expectations.

Sweden’s service production index rose 0.2% on month and 5.8% on year in November.

The United States has several scheduled data releases today:  weekly chain store sales, wholesale inventories, the JOLTS index of job openings and labor turnover, and the NFIB small business optimism index.  Canadian housing starts get reported.  Plosser and Kocherlakota of the Fed have speaking engagements.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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