A Foul Mood to Start the Final Eighth of 2011

November 16, 2011

Investors continue to view European prospects very dimly and to opt for low-risk assets.  This helped the dollar, yen and Japanese bonds but hurt stocks and commodities.  The ECB via the SMP program has reportedly been buying Italian and other troubled debt, but monetary officials continue to oppose expressing a readiness to engaged in “unlimited” support as a “lender of last resort.”

The United States will be releasing several important statistics today: consumer prices, industrial production, the National Association of Home Builders index, mortgage applications, oil inventories, and the Treasury report on international capital flows.

The dollar climbed 0.9% against the kiwi, 0.7% relative to the loonie and Aussie dollar, 0.5% against the euro, and 0.3% versus the Swissie and sterling.  The dollar dipped 0.2% against the yen and by 0.1% versus the yuan.

Equities fell sharply by 2.7% in China, 1.6% in South Korea, 2.0% in Hong Kong, 1.4% in Taiwan, 1.1% in Sri Lanka and and New Zealand, and 0.9% in Japan and Australia.  In Europe, the German Dax and British Ftse have traded 1.3% and 1.1% lower.

The Japanese ten-year JGB yield slid to 0.95%, lowest since November 5, 2010.  British gilt yields also dipped two basis points, and Treasury yields are indicated likely to open softer.

Gold and oil prices fell 0.4% and 0.5% to $1775.30 per ounce and $98.83 per barrel.

The Bank of Japan Policy Board as expected voted 9-0 to leave its collateralized overnight money target at a range of zero to 0.1% and blamed yen appreciation, slower foreign growth, and the flooding in Thailand for a downwardly revised economic assessment

The Central Bank of Chile retained a 5.25% benchmark interest rate.  The last increase was made in June.

Sri Lanka’s central bank kept its repo rate steady at 7.0%.  This decision of no change, as well as the one in Chile, was anticipated.

Australian labor costs rose 0.8% on quarter in 3Q, the smallest gain since 4Q09, and the on-year advance slid a tenth percentage point to 3.7%.  Australia’s index of leading economic indicators slid 0.3% in September, the first drop in four months, and skilled job vacancies dropped by 1.9% in October.

Final euro area consumer price figures confirmed increases of 0.3% on month and 3.0% on year in October.  Core inflation held steady at 1.6%.  A year earlier in October 2010, total and core CPI inflation stood at 1.0% and 1.1%. 

British labor statistics showed

  • A considerably smaller claimant count rise in unemployment of 5.3K after +13.4K in September, 19.1K in August and 33.7K in July.
  • Softer on-year wage growth of 1.8% in September and 1.7% in 3Q for regular pay and 1.9% in September and 2.3% in 3Q for total pay with bonuses.
  • A jobless rate of 8.3% in 3Q, up from 7.9% in 2Q and 7.7% in the first quarter.

Spain’s real GDP was unchanged last quarter according to revised data that confirmed the preliminary indication.  Relative to 3Q10, GDP advanced 0.8% with gains of 8.1% in exports but a drop of 1.2% in domestic demand.  Spain’s leading and coincident economic summary indices respective slipped 0.3% and firmed 0.1% in September. 

Italian consumer prices increased 0.6% in October and accelerated four tenths of a percentage point to 3.4% in on-year terms.  The Irish trade surplus widened about 11% in September to EUR 4.1 billion. 

Chinese foreign direct investment posted an on-year increase of 8.8% in October, which was only about half as much as the 16.7% increase in January-September.

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

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