Greek Debt Crisis Drags on into a New Week

September 26, 2011

Weekend talks around the IMF/World Bank meetings in Washington failed to produce any dramatic action to stop Europe’s debt crisis.  German Chancellor Merkel said a Greek default is possible.  Investors speculating that such would cut that nation’s debt in half.

Stocks slumped in the Pacific Rim but rose so far in Europe.  Share prices dropped 5.0% in Thailand, 2.6% in South Korea, 2.4% in Pakistan and Taiwan, 2.2% in China and Japan, 1.5% in Hong Kong and 1.0% in Australia.  In Europe, however, stocks have recovered 2.6% in Germany, 2.0% in France, and 0.8% in Britain.

The dollar is mixed, with losses of 0.5% against the Aussie dollar, 0.4% versus the yen and 0.2% against sterling but gains of 0.4% relative to the Swissie and euro, 0.3% against the kiwi, and 0.2% versus the loonie and yuan.

The yields on ten-year German bunds and British gilts rose four and three basis points.  The 10-year JGB slipped a basis point to 0.98%.

Gold and oil prices dropped by 1.4% and 1.1% to $1617.30 per ounce and $78.96 per dollar as investors brace for recession.

Germany’s IFO business climate index dropped to 107.5 in September from 108.7 in August and 112.9 in July.  The deterioration, which was not quite as much as forecast, was concentrated in expectations.  Current conditions only dipped 0.2 to 117.9.  By industry, manufacturing and construction worsened, while retailing and wholesaling improved.

The IFO services index dropped to 16.5 in September from 19.7 in August and 25.3 in July.  Like the industrial index, the decline in September was concentrated in expectations.

Italian consumer confidence fell more than projected to 98.5 in September from 100.3 in August.

Czech business sentiment weakened 2.3 points to 89.6, but consumer sentiment improved 0.9 to 77.7 in September.

Euroland’s index of leading economic indicators slumped 1.4% in August, as the coincident index stagnated.

New Zealand’s trade deficit widened to NZD 641 million in August, near a two-year high.

The Swedish trade surplus fell 45% on month to SEK 5.3 billion in August.

Industrial output in Singapore rose 3.9% on month and 21.7% on year last month.

U.S. new home sales data and the the Chicago Fed manufacturing survey results will be released today.  The Bank of Israel’s interest rate decision will be announced, too.

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



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