Less Anxiety Than on Monday

March 8, 2011

Maybe because its Mardi Gras time, there’s less angst in the air.  Share prices, the dollar, and sovereign debt yields are up.  Focus of investor worry has swung somewhat back toward Europe’s debt problems from fear about the impact of elevated oil prices.

Investors believe Qaddafi will be gone when the fighting stops.  Ahead of Friday’s meeting of EU leaders, EU peripheral bond yield premiums have widened.

The dollar rose 0.7% against the Swiss franc, 0.4% against the yen, 0.3% relative to the euro, 0.2% against the yuan and 0.1% against the Aussie dollar.  The greenback is unchanged against the Canadian dollar and has lost 0.5% against the kiwi.

Stocks advanced 1.7% in Hong Kong, 1.6% in Thailand, 1.2% in India and Singapore, 0.8% in South Korea, 0.2% in Japan and 0.1% in China.  In Europe, the Paris Cac, German Dax and British Ftse are up 0.4%, 0.3%, and 0.1%.

Ten-year sovereign German bund, British gilt and Japanese JGB yields are each two basis points higher.

Not much net movement happened in commodities overnight.  Oil has slid 0.1% to $105.33 per barrel.  Gold is steady at $1434.80 per ounce.

German industrial orders snapped back 2.9% after a 3.6% decline in December.  January’s level of orders was somewhat higher than expected, exceeding the 4Q10 average level by 2.2% and the January 2010 level by 16.0%.  Orders had soared 11.6% at an annualized rate in the fourth quarter.  January’s monthly advanced was paced by a 4.5% increase in domestic demand including 3.8% in domestic orders for capital goods.  Foreign orders went up 1.6%.

Japan’s seasonally adjusted current account surplus narrowed 28.3% on month in January to JPY 1.089 trillion.  The unadjusted surplus in this seasonally weak month was JPY 462 billion versus JPY 882 billion a year earlier.  Merchandise imports soared 15.6% on year compared a 2.9% increase in exports.  The unadjusted customs trade surplus in February 1-20 was JPY 466 billion, up sharply from JPY 88 billion a year earlier, as exports increased 8.6% on year while imports fell 2.2%.  Stock and bond transactions in February generated a JPY 1.215 trillion capital inflow.

Japan’s economy watchers index, a gauge of the sentiment of workers that deal will consumer activities, improved sharply to 48.4 in February from 44.3 in January and 40.2 in October.  The outlook component of the index printed at an unchanged 47.2, however.  Moreover, the indices are still below 50, connoting more pessimism than optimism.

Japanese M2 money grew 2.4% in the year to February as expected versus a 2.3% advance in January.  Broad liquidity was unchanged on year.  Bank lending fell by 1.8% on year including trusts and by 2.0% excluding them.  Money and credit growth remain very soft in this deflation-prone economy.

The ECB’s weekly refinancing tender of EUR 111.3 billion was lower than the prior week’s EUR 124.4 billion.  Nowotny and Bini Smaghi, members of the ECB governing council, made hawkish remarks consistent with an intent to raise interest rates next month.

The French trade deficit widened to EUR 5.89 billion in January from EUR 5.05 billion in December.  Such averaged EUR 4.29 billion per month in 2010.  Business sentiment, according to the Bank of France index, held steady last month at 110 after rising from 107 in December.

Same-store retail sales in the U.K. fell 0.4% on year in February according to the British Retail Consortium, and total retail sales were up 1.1% on year, which is the weakest 12-month increase in almost two years.  The 2.5 percentage point rise of value added tax is a big deterrent.  The Royal Institute of Chartered Surveyors’ house price balance index improved to -26 percentage points in February from minus 31 the month before.  Britain’s Chamber of Commerce downgraded projected GDP growth in 2011 to by a half percentage point to just 1.4%.

Icelandic GDP fell by 1.5% last quarter and was unchanged from the final quarter of 2009.  Such was depressed by very weak net exports.  Iceland’s nominal trade posted a wider ISK 10.2 billion surplus in February, however, after ISK 7.78 billion in January.

Swiss unemployment eased further to 3.4% last month from 3.5% in January. Czech unemployment edged down to 9.6% from 9.7% in January.

Consumer confidence in South Africa improved to 55 in the fourth quarter from 47 in 3Q10.  Turkish industrial production rose 0.5% on month and 18.9% on year in January.  New Zealand building sector activity rose 1.1% last quarter, masking a drop of 7.1% in the residential component and a 10.6% increase in non-residential building.  Filipino producer prices rose 1.3% on month in January but were down 3.6% on year. 

A fewl lower-tier U.S. data are due: weekly chain store sales, the NIFB small business optimism index, and the IBD/TIPP optimism index.  Canadian housing starts arrive.  Shirakawa, Governor of the Bank of Japan, will be speaking.

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

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