Jackson Hole Expectations Dumbed Down

August 25, 2011

The annual Jackson Hole symposium sponsored by the Kansas City Fed begins today, with Bernanke speaking at 14:00 GMT tomorrow.  Analysts have scaled back their expectations that he might unveil significant stimulus.

The dollar is narrowly mixed, rising 0.4% against the kiwi, 0.2% relative to the yen, and 0.1% versus the Aussie dollar but easing 0.2% against the euro and Swissie and by 0.1% against the loonie and sterling.  The Chinese yuan is steady.

Asian stocks recorded good advances for the most part, but higher Greek bond yields and premiums have dampened trading enthusiasm in Europe.  Stocks rose by 3.3% in China, 1.7% in Singapore, 1.5% in Japan and Hong Kong, and 1.1% in Australia but fell 0.9% in India and 2.1% in Thailand.  The British Ftse has lost 0.4%, and the Paris Cac and German Dax are only 0.4% and 0.2% firmer.

Gold slumped another 2.6% to $1711.30 per ounce and has given back 10.6% of its value since peaking Tuesday.  Oil edged up 0.3% to $85.44 per barrel.

Yields on 10-year sovereign debt climbed by five, four, and two basis points in Britain, Germany, and Japan.

Steve Jobs resigned as Apple’s CEO.

Libyan rebels still haven’t located Colonel Gaddafi.

In Britain, the CBI monthly survey of retailers showed greater-than-anticipated deterioration in August, as the key index dropped to negative 14 from minus 5 in July and +18 as recently as May.

Consumer confidence fell in Germany, Britain, Sweden and South Korea.  The GFK German index printed at 5.2 in September, down from a downwardly revised 5.3 in August, 5.5 in July and a peak of 6.0 in March.  Britain’s Nationwide index slid to a three-month low of 49 in July from 51 in June.  Swedish consumer confidence deteriorated the most, falling to 4.3 in August from 12.0 in July.  Analysts expected a reading of 10.  South Korean consumer confidence fell three points to 99 in August.

In other Swedish data released today, producer prices rose 0.4% last month but only 0.2% from July 2010.  Domestic producer prices slid 0.2% on month, while export and import prices both climbed by 1.2%.  On-year growth in loans to households slowed to 6.4% in July from 6.7% in June.

Spanish PPI inflation accelerated to 7.4% in July from 6.7% in June.  The PPI increased 0.6% on month.

Japanese stock and bond transactions last week generated a JPY 666 billion capital outflow after a small JPY 28 billion inflow in the week to August 13.

New Zealand reported a surprisingly buoyant 1.7% increase in nominal retail sales during the second quarter.  Such followed a 2.3% increase in 1Q in spite of February’s big earthquake on the South Island, and it left sales 4.1% higher than a year earlier.  Sales volume rose by 0.9% on quarter and 1.1% on year.  New Zealand food price inflation accelerated to 7.9% in July from 7.5% on year in June.

South African producer prices shot up 2.7% last month and were a greater 8.9% above a year earlier after a 12-month increase of 7.4% recorded in July.

Switzerland’s ZEW index of investor expectations deteriorated to minus 71.4 in August from minus 58.9 in July.  The perception of current conditions scored a 34.3, down from 52.9.  Swiss officials have engineered negative interest rates in an effort to reverse excessive Swiss franc strength.

Icelandic CPI inflation held steady this month at 5.0%. Dutch producer confidence in August had a weaker-than-assumed reading of minus 3.3.

Scheduled data releases in North America include U.S. weekly jobless insurance claims and the Kansas City Fed manufacturing index, Mexican 2Q GDP and current account, and Canadian weekly wage earnings.  Hurricane Irene is drawing a lot of interest along the U.S. eastern seaboard; winds are expected to top 130 MPH later today. 

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

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