A Sense of No Hope for the Euro

November 25, 2011

Investors are betting that European and U.S. politicians have no more tricks up their sleeve. Fitch downgraded Portuguese debt, and Moody’s did the same for Hungarian debt.  ECB officials aren’t budging on their insistence that fiscal policymakers, not they, must solve the euro crisis.  Portuguese street protests against budget cuts persist.  The euro lost another 0.7% against the dollar to a seven-week low

As further evidence of a collapse in risk appetite,

  • The dollar also rose 0.8% against the Swissie, 0.5% versus the yen, 0.4% vis-a-vis the Australian and Canadian dollars, 0.3% against the yuan, and 0.1% versus sterling.
  • 10-year German bund and British gilt yields, each at 2.23%, are four and seven basis points higher.
  • Gold dropped 1.1% to $1680.40 per ounce, while oil prices fell by 0.4% to $95.75.
  • The euro is trading heavily on its crosses.  It’s at 102.50 against the yen and 1.2249 relative to the Swiss franc.

Many businesses remain closed in the United States, where no statistical economic data releases are scheduled.

Japanese corporate service prices rose 0.1% both on month and on year in October.  Stock and bond transactions in Japan generated a JPY 281 billion net outflow last week versus a JPY 61 billion inflow in the week of November 12.

Japanese consumer prices edged 0.1% higher in October but were 0.2% lower than a year earlier.  The non-food and energy CPI was 1.0% lower than a year before.  Tokyo consumer prices for added to the deflationary picture, dropping by 0.6% on month and 0.8% on year. 

A 24.3% on-year rise of Singapore industrial production last month was three times greater than anticipated.

French consumer confidence weakened more sharply than assumed in October to a reading of 79 after ones of 82 in September and 80 in August.

German import prices fell 0.3% in October and to 6.8% on year from 6.9% in September, 7.5% in July and 9.2% in October 2010.  Export prices dipped 0.2% and were 3.0% higher than in October 2010.

Italian retail sales, down by 0.4% on month and 1.6% on year in September, was also softer than projected.  So were Finnish retail sales, which showed a volume decline of 0.5% in the year to October.  In Poland, however, retail sales advanced 4.1% in October and by 11.2% on year, surpassing expectations.

The Greek trade deficit widened 13.4% to EUR 1.44 billion in September.  Icelandic CPI inflation eased a tick to 5.2% in October.  Poland’s jobless rate remained at 11.8% last month.  Spanish PPI inflation fell by 0.6 percentage points to a ten-month low of 6.5% in October.

Bank Rossi, the central bank in Russia, left its refinancing rate steady at 8.25%, matching the expected outcome.

Consumer confidence in Brazil improved 3.8 points to 119.0 in November.

Mexico releases data for its jobless rate, GDP growth, and current account deficit today.  No U.S. releases are planned, but the stock market reopens.  Comparisons have lately been made increasingly between its weak performance now and that in late 2008-early 2009.  As a point of reference, the DJIA fell by 6.9% over the six pre-Thanksgiving sessions.  After the collapse of Lehman Brothers, the DOW dropped by 20.8% in the six sessions to October 9, 2008, 13.9% in the six sessions to November 12, 9.0% in the six sessions to January 14, 2009 and 9.3% in the six sessions to March 6.

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

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