A Busy Day of Data Releases, Events, and Market Movement

September 15, 2011

The dollar is lower, with overnight losses of 1.2% against the kiwi, 0.5% relative to the euro and sterling, 0.4% against the Swiss franc, 0.2% versus the Canadian and Australian dollars, and 0.1% against the yen.  The yuan is steady.

Stocks are up by a strong 2.1% in Germany, 2.0% in France, 1.6% in Britain, 1.8% in Japan, 1.0% in Singapore, 2.2% in Taiwan, 1.4% in South Korea, 1.0% in India, 0.7% in Hong Kong and 1.7% in Australia.

Gold fell 1.0% to $1808.50 per ounce, whereas oil firmed 0.3% to $89.21 per barrel.

Ten-year British gilt yields increased seven basis points.  German bunds climbed three basis points, and the 10-year Treasury is signaled for an open above 2.00%.  JGBs are unchanged at 1.00%.

Investors await a deluge of U.S. data today: consumer prices, industrial production, the Philly Fed and Empire State manufacturing indices, weekly jobless claims, and the quarterly current account.  The Canadian monthly manufacturing survey will also be reported.

The Swiss National Bank did its scheduled quarterly monetary policy review,

  • Retaining a rate target of around 0.0% within a 0-0.25% range for 3-month Libor,
  • Reaffirming utmost determination to enforce a minimum exchange rate of CHF 1.20 per euro,
  • Revising the projected inflation path substantially downward,
  • Revising projected growth in the second half of 2011 to zero,
  • Retaining a target for sight deposits held with it at CHF 200 billion, and
  • Revealing a willingness to take further actions against deflation and deficient growth if required.

The Reserve Bank of New Zealand left the Official Cash Rate at a cyclical low of 2.5% because of a “marked deterioration” of the outlook in its trading partners and tighter international bank funding conditions and despite a resilient New Zealand economy and above-target inflation.

U.S. Treasury Secretary Geithner will be attending the meeting of EU finance ministers in Poland.  A U.S. official has never before been to an ECOFIN meeting.

Markets have rallied in relief at yesterday’s pledge by German Chancellor Merkel, French President Sarkozy and Greek Prime Minister Papandreou to keep Greece in the European Economic and Monetary Union.

A survey by China’s central bank revealed the perception of continuing excessive inflation there.

The Reuters Tankan estimates for September suggest that Japan’s recovery from the Sendai earthquake may be losing steam.  The manufacturing index only rose by 2 points to +8 after gaining 4 points in May, six points in June, four points in July and five points in August.  The non-manufacturing index dropped by four points to +3 and is no higher than its value six months earlier.

Euro zone consumer price data for August confirmed a monthly increase of 0.2%, keeping on-year inflation at 2.5%.  The core rate rose 0.3% and showed the same 1.2% 12-month rate of increase as in July.  Employment in Euroland climbed 0.3% last quarter from 1Q and was 0.4% higher than a year earlier.

British retail sales volume sank 0.2% on month in August and was unchanged from a year earlier.  Sales in June-August were just 0.3% above a year earlier, down from on-year growth of 1.0% in the three months to May and 1.5% in the three months to February.  British households are being squeezed by fiscal austerity.

Greek unemployment rose to 16.3% last quarter from 15.9% in 1Q11.  Spain’s index of leading economic indicators plunged 0.9% in July. Italy reported on-year CPI inflation of 2.8% as expected in August but an improved EUR 1.66 billion current account surplus in July after a EUR 4.25 billion deficit in June.  Dutch retail sales grew by a disappointing 0.1% in July, but the August jobless rate was decent at 5.4%.  Finland’s current account surplus in July was only half as big as in June.

Producer prices slid in August by 0.2% and 0.1% in Denmark and the Czech Republic and recorded on-year increases of 6.6% and 5.7%.  Norway’s trade surplus contracted 16% in August as exports fell and imports rose.  Hungarian industrial production advanced 0.8% and 2.7% on year in July.

Swiss industrial production, which had contracted 9.6% in the first quarter, only recovered 3.6% in 2Q. 

Retail sales in Singapore increased 2.1% in July and 10.7% on year, and joblessness last quarter only amounted to 2.1% in this city state.  In Hong Kong last quarter, producer prices were 8.9% greater than a year earlier, and industrial output was up 2.0% on year. Turkish unemployment remained at 10.3% in June.

Australian expected inflation ticked up to 2.8% in September from 2.7% in August.  Aussie motor vehicle sales increased 3.3% in August and were 4.4% better than a year before.

Today marks the third anniversary of the collapse of Lehman Brothers and finds investors worrying if Greece faces a similar fate with even worse ramifications.

Bernanke and Tarullo of the Fed speak.  So does Bundesbank President Weidman and Juergen Stark, who last week resigned from the ECB Executive Board.  Chile holds an interest rate policy meeting.

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

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