After the Christmas Break

December 27, 2011

A few markets remain shut for Boxing Day (Britain, Australia, Hong Kong and New Zealand), but most reopened.  In thin volume, price movements have been limited.

The dollar is down 0.3% against sterling, 0.2% against the yen and 0.1% versus the euro and Swissie.  The greenback faired better against commodity-sensitive currencies, edging up 0.2% relative to the kiwi and 0.1% versus the Aussie dollar.  The loonie and yuan are steady.

Share prices fell 1.3% in China, 0.8% in South Korea, 0.6% in India and The Philippines and 0.5% in Japan.  The Dax ticked 0.2% higher, while the Paris Cac is unchanged.  The 10-year German bund yield dropped five basis points, while the Japanese JGB is flat.

Gold prices fell 0.6% to $1596.80 per ounce.  Oil is 0.2% firmer at $99.86 per barrel.

Three Japanese economic indicators were released.

  1. Corporate service prices fell 0.2% both from the prior month and from a year earlier in November.  The on-year comparison in October had been +0.1%.
  2. Housing starts were 0.3% lower than a year earlier in November after having fallen by 5.8% in the year to October and by 10.8% in September.
  3. Construction orders jumped 21.0%, however, after a 24.3% increase in the year to October.

The Bank of Japan released minutes from a scheduled November 15-16 meeting and an unscheduled gathering on November 30.  While sticking to a baseline view of continuing recovery ahead, the minutes accentuate mounting downside risks posed by Europe’s debt crisis, the elevated yen, softer foreign demand, and floods in Thailand.  Domestic financial market effects were observed already.

The Case Shiller index of U.S. housing prices in 20 metro areas fell 0.6% on month and by a somewhat greater-than-predicted 3.4% on year in October.  The news came in spite of other housing market reports suggesting stabilization.

The Richmond Fed manufacturing index climbed above November’s zero reading to +3.  Although the increase was not quite as far as projected, the positive entry signified expanding activity again.  The index had printed at negative 6 in both September and October.

The Dallas Fed manufacturing index, which had printed below zero for the first time since October 2009 in November, rose by 3.8 points to a reading of negative 1.3 in December.  The high-water mark in 2011 was reached last March with a reading of +24.1.

The Conference Board reported an impressive jump in U.S. consumer confidence this month to 64.5, highest since 65.4 last April and a gain of 9.3 points from a downwardly revised November reading.  The index bottomed at 40.9 in October but has been buoyed as labor market figures also improved.  All the same, consumer confidence continues to run over 30 points below pre-Great Recession readings.

Consumers are less enthusiastic in Europe for obvious reasons.

  • Consumer sentiment in Finland dropped to 0.4 from a 1.5 reading in November.
  • Czech consumer confidence fell 0.8 points to 71.8 in December.  A 1.8-point decline in Czech business sentiment also was announced.
  • The UBS Swiss consumption indicators slid 0.9 points to 0.81 in November.

Greece had a EUR 1.11 billion trade deficit in October, 21% narrower than the month before.

Banks parked a record EUR 412 billion overnight at the ECB.  Efforts to promote interbank lending have not been effective.  The central bank’s weekly fixed rate refinancing operation allotted EUR 145 billion.

U.S. share prices at 10:30 EST (15:30 GMT) showed modest 0.2-0.3% gains.

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

Tags: , ,


Comments are closed.