Continuing Concerns over Europe at the Christmas Break

December 23, 2011

A narrowly mixed dollar has risen 0.3% against the Swiss franc, 0.2% versus sterling and 0.1% against the euro but fallen 0.2% against the Australia dollar and 0.1% relative to the loonie.  The kiwi is steady. 

Markets continue to fear announced European credit rating downgrades.  S&P has still not dropped the French shoe.

Stocks are mostly up, for example so far by 0.4% in North America, 1.0% in Britain, 1.4% in Hong Kong, 1.2% in Australia, 1.1% in South Korea and 0.8% in China.  Equities fell by 0.5% in india and Thailand.

There was little change in European sovereign debt yields, but the 10-year Treasury rose six basis points and edged back above 2.0%.

Oil firmed 0.3%, while gold dipped 0.1% to $99.78 per barrel and $1609.10 per ounce, respectively.

Japanese markets were shut to observe the emperor’s birthday.  Most European markets were open at least part of today, Ireland being an exception.

A fair number of statistical releases occurred in North America.

Canadian GDP started the fourth quarter on a weaker-than-assumed note, holding steady in October due to declines in utility production, construction, and mining and energy extraction.  October GDP was 2.7% greater than a year earlier.

U.S. new home sales increased 1.6% last month to 315K, near expectations.

U.S. durable goods orders grew 3.8% in November and 12.2% on year.  However, capital goods excluding aircraft and defense posted a drop of 1.2% on top of a 0.9% decline in October.

U.S. personal income and spending each firmed by a soft 0.1% in November.  The savings rate slowed to 3.5% from 3.6%, and the core personal consumption price deflator edged up just 0.1% and showed the same 1.7% on-year pace as in October.

Tensions continue to boil over in the Middle East as the United States shifts its foreign policy priorities.  Yesterday violence visited Baghdad.  Today a suicide bombing in Damascus has killed more than 40 people.

There’s been a surprise interest rate cut of 25 basis point cut by Bank Rossii, central bank in Russia.  The new refinancing rate there is 8.0%.

French third-quarter GDP growth was revised down 0.1 percentage points to 0.3%, with an on-year pace of 1.6%.  Consumption and investment rose just 0.3% and 0.2%, and officials now project that GDP will post back-to-back drops of 0.2% this quarter and 0.1% in 1Q12.  Total French PPI inflation in the year to November was 5.6%, with a domestic PPI gain of 4.8%.

Britain’s monthly services index dropped 0.7% in October and was just 1.1% greater than a year earlier.  Service activity in August-October was 0.2% above three months earlier.  Mortgage loans totaled a lower-than-expected 34.7K in November according to the British Bankers Association.

Italian consumer confidence weakened 4.5 points to 91.6 in December.  That was a sharper drop than analysts predicted.  Italian hourly wages in November showed on-year growth of just 1.5%.

In Singapore, consumer prices increased 5.7%in the year to November, but industrial production that month was down 9.6% on year.  Vietnamese consumer price inflation slowed to a still-high 18.1% in this month from 19.8% in November.

Mexico’s trade position swung back into the black last month.

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


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