Markets React as Greek Lawmakers Approve Austerity Measures by 199-74 Vote

February 13, 2012

The dollar and yen are unchanged against each other but down against other major currencies.  The greenback fell overnight by 1.1% against the kiwi, 0.8% versus the Australian dollar, 0.5% relative to the euro and Swissie, 0.4% against sterling and 0.3% against the loonie.  The yuan is steady.

Oil and gold prices rose 1.0% and 0.3% to $99.67 per barrel and $1730.60 per ounce.

Bond yields are mixed.  The 10-year British gilt rose three basis points.  The 10-year JGB is unchanged, and the 10-year German bund yield fell 3 bps.

Share prices rose 1.3% in Indonesia, 0.9% in Australia, 0.6% in Japan, Singapore, Taiwan, and South Korea, 0.4% in Thailand and The Philippines, and 0.2% in India but slid 0.2% in New Zealand and 0.1% in China.  In Europe, the British Ftse has climbed 1.0%, and the German Dax and Paris Cac are 0.6% and 0.5% higher.

The next step in the Greek debt service melodrama occurs Wednesday, when EU finance ministers meet to decide if the Greek promised austerity warrants approval of a second bailout loan.

Japanese fourth-quarter national income statistics showed a greater-than-predicted 2.3% annualized drop in real GDP from 3Q.  GDP was 1.0% lower than in 4Q10 and posted a 0.9% drop in 2011 as a whole.  See review.

The Japanese tertiary index, a gauge of service sector activity, rebounded 1.4% in December, twice as much as predicted.  The tertiary index was 0.6% higher than a year earlier and recorded a 0.7% increase between 3Q and 4Q.

In Australia, loans to households (+2.3%) and businesses (+7.5%) were stronger than forecast in December, and the November advances were revised upward.

German wholesale prices increased 1.2% in January but posted the same 3.0% 12-month advance as in December.  WPI inflation crested at 10.9% last March and recorded a gain of 9.4% in the year to January 2011.  Energy prices climbed 12.1% between January 2011 and January 2012.

The Confederation of British Industries, which represents businesses, projects positive GDP growth in the current quarter of 0.2% and the same in 2Q12.  The Group looks for GDP to increase 0.9% this year and 2.0% in 2013.  CPI inflation is projected to slow to 2.2% by the end of this year; such already moved down to 4.2% in December from 5.2% in September.

The Swiss producer price and import price index was unchanged last month from December and recorded a drop of 2.4% from January 2010.  Both comparisons were more deflationary than assumed.  Greek import price inflation slowed to 7.2% in December from 8.5% in November.  Romanian CPI inflation slowed to 2.7% in January from 3.1% in December.

Turkey’s current account deficit widened 21% on month in December.  The Czech current account worsened by CZK 15.5 billion on month to a CZK 8.93 billion deficit in December.

President Obama delivers his 2013 budget.  No U.S. economic indicator releases are scheduled today.

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

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