New Concerns that Greek Lawmakers Might Not Approve New Austerity

June 27, 2011

Press reports in Greece that as many as four members of the ruling Socialist Party are have second thoughts about voting this week for the austerity plan sent the euro down as low as $1.4102, but such has recovered to 1.4213, up 0.2% on balance in nervous trading.  Monday has a light slate of scheduled data releases in an otherwise busy end-of-quarter week. 

Chinese Premier Wen said China may not achieve its 4% inflation target this year.  He also reiterated confidence in European debt markets.  China continues to diversify away from the dollar and into euros.

The dollar has eased 0.4% against the Swiss franc and 0.2% versus sterling but shows gains of 0.9% against the kiwi, 0.4% relative to the yen and Australian dollar, and 0.2% versus the yuan. 

Equities fell by 1.0% in Japan, Australia and South Korea, 0.9% in Indonesia, 1.4% in Thailand, 0.6% in Singapore and Hong Kong and 0.5% in New Zealand.  Stocks rose 0.9% in India and show gains of 0.3% in Paris and London.  The German Dax is a scant 0.1% firmer.

Oil fell 0.6% to $90.60 per barrel, while gold is hovering near $1500 at $1501.10 per ounce.

Ten-year German bund and British gilt yields firmed by four and one basis points.  The 10-year JGB yield is at a 2011 low of 1.10%.

The Bank for International Settlements urged central banks to raise interest rates to stem rising global price risks and to underscore their inflation-fighting commitment.

Britain’s Hometrack house price index slid 0.1% for a second straight month and recorded a 12-month drop of 3.9% in the year to June after falling 3.7% in the year to May.

Icelandic consumer prices increased 0.5% on month and 4.2% on year in June.

Sweden’s unadjusted trade surplus of SEK 5.7 billion in May was almost four times as great as the surplus a year earlier.  But the seasonally adjusted SEK 7.7 billion surplus was similar to those in March and April.  The surplus of SEK 34.7 billion in January-May was 61.4% wider than in the first five months of 2010.

New Zealand posted a NZD 605 million trade surplus in May, down from NZD 1.148 billion in April and 39.5% less than forecast.

Italian wage inflation remained at 1.8% in May.  Finnish consumer sentiment weakened to a reading of 11.4 in June from 15.4 in May.

A 30% Russian tax on foreign investors’ equity investment earnings was repealed.

U.S. personal income and spending figures arrive today. 

So will the Bank of Israel’s latest interest rate decision.  From a low of 0.5% prior to August 2009, the Israeli central bank rate was increased by 75 basis points each in 2009 and 2010 and by 125 bps so far in 2011.  After a 25-bp hike announced May 23, such now stands at 3.25%.

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

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