Still Watching Greece and Waiting for U.S. GDP Data

January 27, 2012

The dollar has softened overnight by 0.6% versus the yen, 0.5% against the Australian dollar, 0.4% versus the kiwi, 0.3% relative to the euro, and 0.2% against the loonie, Swissie, and sterling. 

The Chinese market remained closed one more day for the Lunar New Year holiday but will reopen on Monday.

Stocks in the Pacific Rim rose 0.9% in India, 0.8% in Singapore, 0.7% in Thailand, and 0.4% in New Zealand, Australia and South Korea.  Movements in Europe have been muted, with the German Dax up 0.2% and the Paris Cac and British Ftse showing downticks of 0.1% and 0.2%.

Oil prices advanced 0.5% to $100.19 per barrel, while gold edged 0.1% lower to $1727.50 per ounce.

The yields on ten-year sovereign debt slid two basis points each in Japan and Britain and by one basis point in Germany.  There is still no announced PSI deal (personal sector involvement) between Greece and its bondholders.  The EU Commissioner voiced hope that a deal would be secured before Monday.

ECB President Draghi is scheduled to speak today at the World Economic Forum in Davos.  Former U.S. Treasury Secretary Summers voiced some cautionary words about the sustainability of the U.S. recovery.

Minutes from the Bank of Japan Policy Board’s December 20-21 meeting are more alarming in tone, with concern about the elevated yen, coming European slowdown and post-quake reconstruction in Japan feeding doubt about the baseline forecast calling for resumed recovery later this year.

Released Japanese consumer price data were close to expectations.  December-over-December CPI comparisons were minus 0.2% for all items, minus 0.1% for the CPI minus fresh food, and minus 1.1% for the CPI excluding both fresh food and energy.  The CPI did not change between November and December.  Tokyo’s consumer price index posted drops of 0.3% both on month and on year in January. 

Total Japanese retail sales rebounded 1.8% last month after falling 2.0% in November.  In on-year terms, sales were 2.5% greater in December and 1.0% higher in calendar 2011.  Large store retail sales recorded on-year declines of 0.4% in December, 1.3% in the fourth quarter, and 1.8% in 2011.

Singapore PPI inflation accelerated to 8.4% in 2011 from 4.7% in 2010.  Thai industrial production in December was 25.8% below its year-earlier level, reflecting that country’s massive flooding.  South Korean consumer confidence ticked a point lower to a reading of 98 in January.

New Zealand experienced its first trade surplus in five months during December, NZD 338 million in size.  The fourth quarter saw a NZD 195 million deficit posted.

Money and credit growth slowed in the euro area last month.  M3 money was 1.6% higher in December than a year earlier, down from advances of 2.0% in November and 2.6% in October.  In fourth quarter-over-fourth quarter terms, M3 rose 2.1% in 2011 compared to a gain of 1.6% in 2010 and a drop of 0.1% in 2009.  M3 previously had soared 9.2% in 2006, 12.1% in 2007 and 7.9% in 2008.  Marketable instruments, which constitute the difference between M3 and M2, contracted 0.2% between December 2010 and December 2011.   Loans to the private sector showed slower on-year growth of 1.0% in December after 1.7% in November and 2.7% in the year to October.  Lending to households slowed to a gain of 1.5% from 2.1% in November, and loans to non-financial firms decelerated to 1.1% from 1.6%.

German import prices rose 0.3% on month in December and were 3.9% higher than a year before.  Import prices had increased 12.0% between December 2009 and December 2010.  Non-oil import price inflation was only 2.1% in December, down from 5.1% for 2011 as a whole.  Export prices rise 3.7% in 2011 but just 2.1% between December 2010 and December 2011. 

Hesse is the first region of Germany to report January consumer prices, which fell 0.3% on month but edged two-tenths higher to 1.9% on an on-year basis.  Belgian consumer prices climbed 0.7% in January and accelerated to a 3.7% 12-month gain from 3.5% at end-2011.  Greek producer price inflation of 5.7% in the year to December represented a 14-month low.  Icelandic CPI inflation unexpectedly accelerated to 6.5% in January from 5.3% in December.

Spain’s monstrous unemployment continues to crest, rising to 22.85% in the fourth quarter of 2011 from 21.52% in 3Q.  Spanish retail sales in December were 6.2% lower than a year earlier in volume terms.  Poland’s jobless rate also increased, climbing to 12.5% last month from 12.1% in November, and the Polish consumer sentiment index improved 1.8 points in January to a still-depressed reading of negative 26.8.  Swedish retail sales volume was 1.5% greater than a year earlier in December.

Irish retail sales rose 2.1% in December and were 3% above a year earlier.  Finnish consumer confidence improved in January.

Besides the first estimate of fourth-quarter GDP, today’s U.S. data calendar includes the U. Michigan consumer sentiment index for full January.

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

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