Trading Winding Down as Blood is Spilt in Iraq

December 22, 2011

The dollar is narrowly mixed, showing rises of 0.4% against the Swiss franc, 0.2% versus the yen and euro, and 0.1% against the loonie and sterling.  The dollar has lost 0.3% against the kiwi after better than expected New Zealand GDP growth was reported, and the greenback has also dipped 0.1% relative to the Aussie dollar.  The yuan is steady.

Share prices fell by 1.2% in Australia, 0.8% in Japan, 0.5% in New Zealand, 0.3% in Singapore, and 0.2% in Hong Kong.  The Paris Cac, German Dax and British Ftse are 1.2%, 0.7% and 0.8% stronger.  U.S. stocks opened higher following better-than-anticipated jobless claims data.

The yield on 10-year British gilts is three basis points lower, while those on Japanese JGBs and German bunds edged down a basis point.

Gold is 0.4% softer at $1607.7 per ounce.  Oil is up 0.1% at $98.76 per barrel.

U.S. real GDP growth last quarter was revised downward to 1.8% (1.5% on year) from 2.0% instead of the upward correction that analysts were expected.  Consumption growth was revised lower to 1.7%, and inventories exerted a 1.35 percentage point drag on the growth rate.  The core personal consumption price deflator was only 1.6% higher than a year earlier.

U.S. jobless insurance claims continued their downtrend last week, dropping to 364K and a 4-week average of 380.25K.  364K was the lowest reading since April 2008.  Outstanding continuous jobless claims also fell in the latest reported week.

The Chicago Fed national activity index weakened to a three-month low of negative 0.37 in November from minus 0.11 in October.

Market chatter continues that the much-higher-than-expected size of the ECB’s 3-year repo operation underlines the very weak state of European banks.

Turkey’s central bank left its one-week repo rate steady at 5.75%, stressing the need to contain inflation, which is well above target, but also the need for a flexible monetary stance in the face of so much global financial and economic uncertainty.  Turkey’s unusual approach to the balancing act has drawn increasing criticism from private analysts.

Japan’s government revised its growth projections down to minus 0.1% this fiscal year and 2.2% in FY12/13.

British 3Q GDP growth was revised up 0.1 percentage point to 0.6%, which was also the on-year pace.  Markets are unimpressed.  Personal consumption was flat last quarter, and government spending was revised sharply lower to 0.2%.  More austerity is coming, and Britain’s European markets are in recession.  Moreover, a record GBP 15.2 billion current account deficit in 3Q was some 50% greater than assumed and represented a dangerously high 4.0% of GDP.

New Zealand GDP advanced 0.8% in 3Q and 1.9% on year, beating expectations.  Consumption growth of 1.5% was the best since 1Q07.  The data reflect the boost of being host country for the world rugby cup.

Dutch GDP was revised to a drop in 3Q of 0.2% and an on-year advance of 1.6%.  Danish GDP was unchanged from 3Q10. Italian retail sales were 1.5% lower than a year earlier in October.  Belgian CPI inflation slowed to 3.5% in December from 3.9% in November.  Irish retail sales in November were down 0.8% from a year before. 

Hungarian retail sales edged down 0.1% in October and were up 0.6% on year.  Polish unemployment increased to 12.1% last month, and retail sales dropped 0.5% on month.

Hong Kong’s current account surplus of HKD 33.6 billion last quarter was over seven times wider than in 2Q.

Canadian average weekly earnings rose 1.4% between September and October and 2.7% on year.

A car bombing in Baghdad, Iraq has killed dozens.

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


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