Waiting for Draghi’s Press Conference and U.S. Retail Sales

January 12, 2012

Equities show overnight gains of 1.4% in Germany and 1.2% in France ahead of the ECB policy announcement and monthly press conference.  The dollar is down 0.3% against the euro and 0.5% softer relative to the Swiss franc.

The dollar otherwise has dipped 0.2% against the loonie and 0.1% versus sterling, while firming 0.1% against the kiwi and yuan.  Dollar/yen is steady.

Share prices in the Pacific Rim rose 1.3% in Sri Lanka and 1.0% in South Korea but fell 0.9% in Indonesia, 0.7% in Japan and 0.2% in Australia.  The British Ftse is 0.3% higher.

The 10-year German bund yield rose three basis points.  An auction of 1-year Italian bills fetched a rate of 2.735%, less than half the rate at the prior December auction.  The 10-year gilt yield edged 1 basis point higher, and its Japanese counterpart dipped that amount to 0.96%.

Japanese data released today showed

  • 0.5% on-year growth of bank loans (excluding trusts) in December.  Such climbed 0.3% in the year to 4Q11.
  • A JPY 438 billion net capital inflow in December generated by stock and bond transactions with non-residents.
  • A customs trade deficit of JPY 497 billion in the first 20 days of December versus a JPY 34 billion surplus a year earlier.  Exports sank 8.3%, while imports were 5.6% greater than a year before.
  • An improved reading on the economy watchers index of 47.0 in December, which was at a 4-month high after 45.0 in November.  This index is a gauge of sentiment in the service sector and dovetails with retail activity.
  • An unadjusted JPY 138 billion current account surplus in November, 85.5% lower than a year earlier.  The “Basic Balance” which combines long-term capital flows and the current account was in surplus by JPY 1.255 trillion versus JPY 1.654 trillion in November 2010.
  • A seasonally adjusted current account deficit of JPY 129 billion in November after a deficit of JPY 86 billion in October.  Exports fell 0.9% on month after tumbling 4.4% in October.
  • Somewhat stronger on-year growth of 17.4% in machine tool orders last month versus a gain of 15.8% in the year to November.

China released CPI and PPI figures.  Consumer price inflation of 4.1% in December was similar to the 4.2% pace in the year to November but well below the 2011 average rate of 5.4% and last year’s peak of 6.5% in the year to July.  Non-food consumer price inflation dipped below 2.0%.  PPI inflation of 1.7% in the year to December was down from 2.7% in November and a 2011 high of 7.3% seen in both March and August.  Receding inflation is creating scope for the People’s Bank of China to relax its tight policy stance.

Indian industrial production was 5.9% greater than a year earlier in November after showing a 5.1% decline in October.

The Bank of England’s Monetary Policy Committee decided to leave its policy settings unchanged.  The result was expected.

Bank Indonesia’s 6.0% benchmark interest rate was left unchanged, matching most but not all analyst forecasts.  Some anticipated a rate cut.

The ECB policy announcement is due within the hour.  Analysts are mostly waiting for the Draghi press conference at 12:30 GMT.

Industrial production in the euro area dipped 0.1% in November following drops of 2.1% in September and 0.3% in October.  Production also was 0.3% lower than in November 2010.  As recently as August, such had posted a 12-month increase of 6.0%.  Output in October-November was 1.3% lower than the 3Q average level.  Between October and November, output fell by 9.4% in Ireland, 1.6% in Portugal, and 1.0% in both Spain and Germany but rose 1.1% in France and Greece.

British industrial production performed much more weakly than anticipated in November, dropping 0.6% on month and 3.1% on year.  Factory output declined 0.2% from October and by 0.6% from November 2010.

Italian industrial production firmed 0.3% in November but stayed 4.1% below its year-earlier level.  Danish industrial output posted a smaller on-year 4.1% rise in November after advancing 7.7% in the year to October.  The value and volume of Dutch retail sales was 1.3% and 2.9% greater than a year before in November.

Swedish consumer price inflation slowed to 2.3% in December from 2.8% in November.  French CPI inflation remained at 2.5% in December, led by a 9.3% increase in energy.  German CPI inflation of 2.1% in the year to December was below November’s 2.4%, October’s 2.5%, and September’s 2.6%.  Inflation last year averaged 2.3%, up from 1.1% in 2010 and 0.4% in 2009 but below the 2.6% reading in full-2008.  In 2011, the energy component of the CPI went up 10.0%, and every other item collectively edged just 1.3% higher.

The French current account deficit narrowed 45% on month to EUR 2.3 billion in November.  Greek import price inflation dipped a tenth percentage point that month to 8.5%, but the Greek jobless rate worsened to 18.2% in October from 17.5% in September.

Scheduled U.S. data feature U.S. retail sales and include weekly consumer confidence and jobless insurance claims , as well as monthly business inventories and the Federal budget numbers.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

Tags: , , , ,


Comments are closed.