Sanguine Market tone Amid Data Deluge

November 29, 2011

Stocks and commodities are mostly higher, and the dollar has given back more ground.  Italian sovereign debt auctions fetched much higher yields but were mostly subscribed.  EU finance ministers meet today in Brussels ahead of the semi-annual leaders summit on December 9.  One piece of key unfinished business concerns the details over how to enlarge the EFSF rescue facility and how such will operate.

The dollar has fallen 1.3% and 1.2% against the Australian and New Zealand dollars.  The greenback also lost 0.8% against sterling, 0.7% versus the Canadian dollar, 0.4% relative to the Swissie, 0.3% against the yen and euro, and 0.2% relative to the yuan.  Japanese officials were again suggesting that more forex intervention may be done to counter yen strength.

Share prices advanced by 2.3% in Japan and South Korea, 1.4% in China, 1.3% in Taiwan, 1.2% in Hong Kong, 1.1% in Australia and Indonesia, 0.9% in Malaysia and 0.7% in New Zealand.  European stocks have made sub-1% gains of 0.8% in France, 0.7% in Germany and 0.3% in Britain.  In Asia India’s 1.0% drop and small losses in Singaporean and Filipino equities went against this day’s general tide.

The yields on ten-year British gilts and German bunds are six and one basis points lower.  Italian yields exceed 7%. Japanese JGBs are steady.

Oil and gold prices advanced 0.6% and 0.2% to $98.77 per barrel and $1718.30 per ounce.

Japan’s unemployment rate jumped by a rather larger 0.4 percentage points to 4.5%, highest since July, and employment posted an on-year decline of 0.3% after back-to-back decreases of 0.5%.  The job offers/seekers ratio was steady at 0.67.

Japanese retail sales increased 1.4% seasonally adjusted between September and October and were 1.9% greater than a year earlier.  Sales in 3Q had been 1.0% lower than in 3Q10.  Large-store retail sales fell in October on year by 1.4% after a drop of 1.7% between 3Q10 and 3Q11.  Real household spending firmed 0.3% on month and posted a smaller on-year drop of 0.4% in October after declining 1.9% in the year to September.

Australia’s government released its Midyear Economic and Fiscal Outlook, which revised down projected GDP growth for 2011/12 to 3.25% from 4.0% and for 2012/13 to 3.25% from 3.5%.  As a result of softer growth, the budget will show a larger deficit this fiscal year of AUD 37 billion (A AUD 22.6 billion shortfall had been initially projected).  Officials still believe a surplus will be achieved next fiscal year, albeit of only AUD 1.5 billion.

Producer price inflation in Singapore accelerated to 11.6% in October from 11.0% in September.  South Korea’s current account surplus widened 50% last month to $4.2 billion and included a $3.6 billion merchandise trade surplus.

South African GDP grew 1.4% annualized between 2Q11 and 3Q11 and by 3.1% between the third quarters of 2010 and 2011.  M3 money was 7.3% higher in October than a year earlier.

Euro area monthly sentiment indices were released overnight.

  • Overall economic sentiment (ESI) dropped 1.1 points to 93.7 in November, but a result such as this had been anticipated.  The reading was at 98.4 three months earlier and struck a 2011 high last February at 108.0.
  • Consumer confidence printed at minus 20.4, same as the preliminary indication, and down from minus 19.9 in October and minus 9.7 at mid-2011.
  • Industrial confidence dropped 0.8 to minus 7.3.  Such stood at minus 2.7 in August and +6.7 last February.
  • The service sector confidence gauge swung below zero to minus 1.7 from +0.1 in October, +3.7 in August, +9.3 last May and +11.2 in February 2011.
  • Retail sector confidence worsened another 1.3 points to minus 11.0.  It’s 2011 high last February was still below zero at minus 0.2.
  • Construction sector confidence was the one area to improve, rising 0.3 points to minus 24.8.  It has ranged narrowly this year between negative 23.4 and negative 26.6.
  • The Business Climate Index (BCI) weakened to minus 0.44 in November from minus 0.19 in October, +0.06 in August, and +1.47 last February.

Greek producer price inflation eased to 8.1% in October from 8.3% in September. Belgian consumer price inflation picked up to 3.9% in November from 3.6% in October.  Spanish consumer prices advanced 2.9% in the year to November.  Icelandic PPI inflation slowed 1.1 percentage points in October but remained in double-digit territory at 12.8%.  Italian on-year wage inflation remained at 1.7% in October.

The British Nationwide house price index exhibited greater resilience than expected in November, posting its third straight monthly increase, a gain of 0.4%, and printing with an on-year gain of 1.6%.

U.K. mortgage approvals of 52.7K last month slightly exceeded both the September amount and analyst expectations.  Net mortgage lending of GBP 1.3 billion was more than twice the expected size, but unchanged net consumer credit undershot forecasts of GBP 0.3 billion.  The U.K. M4 money stock was 2.7% lower in October than a year earlier. 

Swedish real GDP in 3Q, up 1.6% from the second quarter and by 4.6% on year, surpassed market expectations.  Spanish retail sales in October were 6.9% lower than a year earlier on a volume basis.  Portugal’s economic climate index worsened in November to minus 3.5, and consumer confidence printed at minus 56 after a score of minus 53 in October.  The Swiss consumption indicator, which is compiled by UBS, improved by 0.07 points to 0.91 in October.

Scheduled U.S. data today include the FHFA and Case Shiller house price gauges, the Conference Board consumer confidence index, and weekly chain store sales.  Yellen, Raskin, Kocherlakota, Lockhart and Williams of the Fed speak publicly.  Hungary’s central bank is expected boost its 6% benchmark interest rate later today to support the forint.  Canada reports the 3Q current account, which has been running in deficit.

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

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