Sadie Hawkins Day Full of News

February 29, 2012

Mitt Romney won the Michigan primary by three percentage points, but delegates are being awarded proportionately for that state.  His margin of victory in the Arizona primary surpassed 20 percentage points.

The ECB’s second 3-year LTRO pumped EUR 529.5 billion of cheap 1% cash into the euro area banking system, topping the EUR 489 billion total from the first 3-year LTRO done in late December.  The two operations totaled an astounding 10.8% of GDP.  This month’s operation saw many more banks participate than at the first one.  No further 3-year LTROs are planned.

Japan, Australia, and South Korea reported stronger-than-forecast data.

Greek Prime Minister Papademos secured parliamentary approval for $4.3 billion of austerity measures, a needed condition for next month’s bailout from the troika.

Fed Chairman Bernanke presents round one of his semi-annual Humphrey-Hawkins testimony today before the House Financial Services Committee, an unfriendly audience for the central bank.  Revised 4Q U.S. GDP will be reported today as well.

Commodity currencies were in strong demand.  The Aussie dollar touched a 3-week high of USD 1.0858 and is up 0.5% on balance.  The loonie also rose 0.5, while the kiwi improved 0.9% versus its U.S. counterpart to its best level in almost six months.  Otherwise, the dollar firmed 0.2% against the euro and Swissie but eased 0.2% relative to sterling.  The yuan softened 0.1%.

Share prices climbed 2.1% in Indonesia, 2.0% in Taiwan, 1.3% in South Korea, 1.6% in The Philippines, 1.3% in South Korea, 1.1% in Pakistan, 0.8% in Australia, Singapore and Malaysia, and 0.4% in New Zealand.  Japan’s Nikkei and the British Ftse are unchanged, while the German Dax and Paris Cac have risen 0.5% and 0.4%.

The yield on 10-year German bunds edged up a basis point, and that on 10-year JGBs dipped a similar minor amount.  Gilts are steady.

Oil prices firmed 0.3% to $106.82 per barrel, but gold eased 0.1% to $1786.80 per ounce.

Japanese officials upgraded their assessment of industrial production after reporting a much bigger-than-expected 2.0% monthly increase in January.  Output in January was 3.6% above the 4Q level, and survey evidence points to a 1Q-over-4Q jump of more than 5%. 

In other reported Japanese data,

  • The manufacturing purchasing managers index of 50.5 in February was little changed from a reading of 50.7 in January and the fourth reading above but near 50.0 out of the last five months.  The message is one of stability.
  • On-year growth in motor vehicle production accelerated to 18.6% in January from 13.4% in December.
  • Housing starts in January were a smaller-than-assumed 1.1% less than a year earlier after posting a 7.3% on-year drop in December.
  • Construction orders surpassed the level in January 2011 by a robust 24.6%.

South Korea industrial production increased 3.3% last month.  A small decline had been anticipated.  Production nonetheless was a bit lower than a year earlier for the first time in 2-1/2 years.  The South Korean index of leading economic indicators and the economy’s service-sector index recorded on-year increases last month of 0.7% and 0.9%.

Australian retail sales rose 0.3% in January to a 4-month high and was 2.7% above a year before.  Construction work completions increased 2.6% between 3Q and 4Q and exceeded the year-earlier total in the fourth quarter by a robust 12.9%.  Private-sector credit in Australia was 3.5% higher than a year earlier last month.  New home sales fell 7.3% last month to a six-month low.  Even so, these figures in their entirety do not lend any urgency to a need for additional monetary easing.

New Zealand’s business sentiment index strengthened to 28.0 in January from 16.9 the month before.  An 8.3% jump in January of New Zealand building permits easily surpassed expectations.  M3 money was 5.4% greater than a year before, which is a decent increase.

Indian GDP growth slowed to 6.1% on year in 4Q11 from 6.9% in 3Q.  PPI inflation ticked up to 8.0% in Singapore last month but eased to 4.1% in Malaysia.  Thailand’s current account surplus plunged over 42% between 3Q11 and 4Q11, reflecting that nation’s flooding.

British banking data exhibited improvement.  Mortgage approvals last month totaled 58.7K after 55.0K in December.  Analysts predicted a 53.7K total.  The on-year decline of M4 money of 1.8% was smaller than a 2.5% drop in the year to December.  Net mortgage lending of GBP 1.6 billion was twice expectations.  Consumer credit posted marginally positive growth instead of dipping a little.

Consumer confidence in the U.K. retained a minus 29 score in February.  While an 8-month high, such failed to improve further as hoped.

Euroland’s consumer price inflation ticked down a tenth of a percentage point to 2.6% last month, still 0.7 percentage points above the target ceiling which was also exceeded all of 2011.  Core inflation also fell by 0.1 percentage points, reaching 1.5%.

German import prices increased 1.3% last month and by 3.7% from January 2011.  Such had risen 11.8% between January 2010 and January 2011.  Import price inflation averaged 7.8% in 2010 and 8.0% last year.  Non-oil import price inflation slowed to a manageable 1.6% from 2.1% in December. 

German labor statistics for February were close to expectations.  The number of unemployed workers was unchanged from January and constituted 6.8% of the workforce, down from 7.3% in February 2011. 

French consumer spending foiled expectations of a rebound from December’s 0.2% downtick and instead dropped by 0.4% in January.  From a year earlier, spending fell by 2.2%. 

The Swiss index of leading economic indicators printed at -0.12 in February after readings of minus 0.15 in January and 0.01 in December.

Swedish GDP slumped 1.1% last quarter and to an on-year pace of 1.1%.  For years, Sweden had performed much better than most of Europe.  Danish GDP firmed 0.2% on quarter and 0.7% on year in 4Q11. 

Spanish CPI inflation held at 2.0% this month.  Dutch PPI inflation slowed to 5.5% in January from 6.1% in December.  Austrian CPI inflation eased from 3.2% in December to 3.0% in January.  In Greece, PPI inflation accelerated in January to 7.5% from 5.7%, and retail sales in December were 12.7% lower than a year earlier versus an 8.9% drop in the year to November.

Turkey’s trade deficit narrowed 13.5% on month in January.  South African private sector credit and M3 money expanded by 7.3% and 6.6% in the year to January.

Aside from the aforementioned Bernanke testimony and GDP report, U.S. Midwestern purchasing manager surveys and the Fed’s Beige Book of regional economic trends will be released. Fisher and Plosser, presidents of the Dallas and Philly Fed, speak publicly.  Mortgage applications last week eased another 0.3%, and the 30-year fixed mortgage rate was 4.07%, down two basis points and very close to its record low.

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