Greece: Deal or No Deal?

February 6, 2012

A new week began Greek politicians still balking at the lending troika’s insistence on further austerity.  Time is running out to get a deal.

Stock market declines as of 18:00 GMT against this risk off backdrop have been comparatively mild.  The German Dax is unchanged and the U.S. S&P 500, Dow Jones, and British Ftse have not lost more than 0.3%.  The Paris Cac is down 0.7%.  Earlier today, stocks rose 1.1% in Japan and Australia, 1.2% in The Philippines, and 0.6% in India.  Share prices fell 1.0% in Indonesia, 0.5% in Thailand, 0.2% in Hong Kong, and 0.1% in New Zealand and China.

The dollar has firmed 0.2% against the euro and loonie and 0.3% relative to the Aussie dollar, but the U.S. currency has eased 0.3% versus the kiwi and 0.2% against the yen.  Sterling and the Swiss franc are unchanged against the greenback.

Ten-year U.S. Treasury and British gilt yields are two basis points lower.  The 10-year German bund has fallen four basis points, while the JGB advanced 2 bps.

Oil and gold prices have dropped 0.8% and 0.9% to $97.04 per barrel and $1724.20 per ounce.

Australian data released today showed an unexpected 0.1% drop in December retail sales, a much greater-than-anticipated 6.0% leap in January job ads, and lessening expected inflation of 2.2%.  Retail sales were 3.0% greater than a year earlier, but sales volume posted a smaller 0.4% increase last quarter than the gain of 0.6% in the third quarter of 2011.  The rise in job ads was the largest monthly increase since February 2010. 

Indonesian real GDP advanced 6.5% last year after climbing 6.10% in 2010.  GDP fell 1.3% on quarter in 4Q11 but matched the full-2011 on-year growth of 6.5%.

German industrial orders rebounded more sharply than anticipated in December, rising 1.7% after a 4.9% slump in November.  Orders were unchanged from December 2010 and 0.5% lower than their fourth-quarter average level.  Domestic orders for capital goods, a leading barometer of future business investment, fell 1.2% in 4Q11 but surpassed the 4Q mean by 1.3% in December.  Foreign orders went up 4.3% in the final month of 2011.

The German construction purchasing managers index increased 4.1 points to 53.2 in January, which constituted an 8-month high.  The German composite services and manufacturing PMI, reported just before this past weekend, printed at 53.9 after 51.3 in December and 49.4 in November.

The Sentix gauge of investor sentiment toward the euro area economy rose 10.0 points to minus 11.1 in February.  That improvement was twice as much as expected.  Current conditions were perceived to have risen three points.

Britain’s Halifax house price index rose 0.6% in January and posted a smaller on-year drop in November-January of 1.8% than had been predicted.  U.S. car sales were unchanged from a year earlier in January.

Czech industrial output fell 0.8% in December and recorded a smaller 2.0% rise from a year earlier.

The Saudi non-oil PMI index rose 2.3 points to 60.0 in January.

JP Morgan’s world composite PMI estimate rose 1.9 points to 54.6 in January.

A reasonable chance exists that the Reserve Bank of Australia will cut the Official Cash Rate.  The OCR announcement is due at 08:30 GMT tomorrow.  German industrial production and U.S., consumer credit figures will also be reported Tuesday.

The non-sporting buzz from Sunday’s Super Bowl is the "Half Time in America" ad.  The contrast between the inspiration conveyed by Clint Eastwood and the lack of connection between average voters and the current field of presidential candidates couldn’t be more striking.

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

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