More Successful Sovereign Debt Auctions in Euro Area

January 19, 2012

Spain was able to auction EUR 6.6 billion of sovereign debt, about 50% more than planned, while a French auction fetched a lower yield.

The dollar fell 0.4% against the Swiss franc and euro.  The euro got as high as $1.2919 versus a 17-month low of $1.2624 last Friday.  The franc is closer to testing the 1.2000 per euro line in the sand defended by Swiss monetary authorities since September 6.  The greenback also dipped 0.2% against the loonie.

The dollar is unchanged relative to the yen, yuan, and sterling.  The weakest currency overnight has been the Aussie dollar following disappointing Australian labor statistics.  The greenback is 0.8% higher against the AUD and up 0.2% versus the kiwi.

Chinese share prices advanced 1.9% in their last session before the long Lunar New Year break.  Elsewhere in the Pacific Rim, equities rose 1.3% in Hong Kong, 1.2% in South Korea, 1.2% in Indonesia, and 1.0% in Japan, but stocks slid 0.1% in Australia.

Yields on 10-year German bunds and British gilts increased by three and two basis points but remain below 2.0%.

Oil prices jumped 1.0% to $101.58 per barrel.  Gold prices edged 0.2% higher to $1663.70 per ounce.

Australia suffered a 29.3K job loss in December.  That’s the worst result since April and about 40K from market expectations.  Employment in November had declined also but by a lesser 7.5K.  The labor participation rate fell 0.3 percentage points to 65.2, while the jobless rate was flat at 5.2%.

Expected Australian inflation over the coming year accelerated in January to a 3-month high of 2.8% from 2.4%.

New Zealand consumer prices, on the other hand, fell 0.3% last quarter and to 1.8% on year from 4.6% in 3Q11 and 5.3% in the second quarter.  The on-year comparison no longer embodies the GST tax hike of 4Q10.  Hence, on-year inflation was the lowest since 1.5% in 3Q10.  New Zealand consumer confidence rebounded 7.1% this month.

Japanese department store sales recorded a rare on-year advance in December (+0.8%) after dropping 1.9% in the year to November.  Tokyo sales were 0.3% higher than a year before.  Japanese stock and bond transactions last week generated a JPY 939 billion capital outflow, more than twice as much as the JPY 434 billion outflow in the first week of 2012.

China’s index of leading economic indicators exhibited quickening improvement during the fourth quarter, rising by 0.7% in December after gains of 0.5% in November and 0.4% in October.  This key economy for world economic health seems on a soft landing trajectory, not the disruptive hard landing that had been feared.  The index of coincident indicators increased 0.8% last month.

The central bank in the Philippines, Bangko Sentral ng Pilipinas, cut its key borrowing and lending rates by 25 basis points each to 4.25% and 6.25%.  The cuts had been expected by analysts and were a reaction to external economic trends.

Unemployment in Hong Kong averaged 3.3% last quarter, down from 3.4% in September-November.

According to the Nationwide measure, British consumer confidence slipped two points in December to 38, which was a mere two points above last year’s cyclical low in October.

Euroland’s seasonally adjusted current account was in deficit by EUR 1.8 billion in November, as surpluses of EUR 4.9 billion in merchandise trade and EUR 4.2 billion in services were outweighed by a deficit of EUR 11.4 billion in transfer payments.  The current account deficit that accrued over the twelve months to November of EUR 45.8 billion on an unadjusted basis was 43% wider than a year earlier.

The ECB published its January Bulletin, which rehashed remarks by President Draghi at last week’s press conference.  Bundesbank President Weidman speaks publicly today.  Bank deposits at the ECB fell sharply today.  Greece reportedly is still trying to negotiate a expansion of IMF loans, which U.S. politicians oppose.

Irish consumer prices dipped 0.3% in December and to a 12-month increase of 2.5% from 2.9% in the year to November.  Portuguese PPI inflation slowed to 4.4% in December from 5.2% in November.  Consumer confidence in The Netherlands remained weak at minus 37 in January instead of edging higher as predicted.  The Dutch jobless rate also was unchanged, holding at 5.8% in December. 

South Africa’s central bank will make an interest rate announcement today.  Wholesale sales in that economy increased 1.8% in November and by 5.8% on year.

Scheduled U.S. data releases today include housing starts, building permits, consumer prices, the Philly Fed manufacturing index and weekly jobless insurance claims.  Canada’s monthly manufacturing survey gets released today as well.  There will be a Republican presidential candidates’ debate in South Carolina tonight ahead of Saturday’s primary.  The race is virtually over if Romney wins that one.

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

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