March Comes in Like a Lamb

March 1, 2012

Amid a deluge of data releases, markets were generally well-behaved to start the new month.

  • The dollar is steady against the euro and Swissie and shows modest losses of 0.3% versus the Canadian and Australian dollars and 0.2% against the yen, kiwi, and sterling.  The dollar edged 0.1% higher against the yuan.
  • Stocks were mixed in the Pacific Rim and are higher in Europe where euro area finance ministers are meeting to give a green light to a second Greek aid package.  Greek lawmakers approved pension and healthcare spending cuts.  The German Dax, Paris Cac and British Ftse each show rises of 0.6%.  Stocks rose 1.3% in South Korea and 0.4% in Thailand but fell 1.0% in Australian, 1.4% in Hong Kong and 0.2% in Japan.  Stocks are steady in China and Taiwan.
  • After Wednesday’s greatest daily slump in three years, gold prices edged up 0.1% to $1712.30 per ounce.  Oil prices also firmed 0.1% to $107.19 per barrel.
  • The 10-year German bund and British gilt yields are four and six basis points higher.  Japanese JGBs are unchanged.

Manufacturing PMI results for February are mixed.

  • Euroland scored a 49.0 on the purchasing managers index, same as the preliminary flash indication and up 0.2 points from January and 2.1 points above December’s reading.  The outcome connotes stabilization after a contraction in 4Q11, but a disturbing sign was a significant acceleration of cost push pressure.  Germany’s 50.2 reading was at a 2-month low.  Ireland’s 49.7 constituted a 4-month high.  The scores for France of 50.0 and Italy of 47.8 constituted 7- and 5-month highs.  Austria’s 52.0 and the Dutch reading of 50.3 were at 8- and 6-month highs.  However, the Greek measure plunged 3.3 points to an all-time low of 37.7, and Spain’s PMI of 45.0 was at a 2-month low. 
  • The British purchasing managers index in manufacturing (51.2) exceeded the 50 breakeven level for a second straight time after seven sub-50 readings in a row, but input price inflation picked up significantly as such did in the euro area.
  • Poland scored a neutral 50.0, down from January’s 52.2 reading.  Hungary’s 50.5 was 0.7 better than the January reading and at a 5-month high.  The Czech PMI was also 50.5, breaking a streak of three straight sub-50 scores.
  • The Swiss PMI returned to 49.0 after dropping from 49.1 in December to 47.3 in January.
  • Sweden’s PMI of 50.3 was not quite as high as forecast and fell between January’s 51.4 and December’s 48.9. 
  • Norway’s index was 56.9, substantially better than expected and up from 54.7 in January and 46.6 in December.
  • The Danish PMI was 54.9 in February, up from 54.6 and the third above-50 result in a row.
  • China is avoiding a hard landing.  The HSBC-compiled PMI rose to 49.6, just shy of 50, from 48.8 in January and 47.7 in November, while the government’s official index (the CFLP) stayed above 50 at 51.0 after readings of 50.5 in January and 50.3 in December.
  • India’s 56.6 PMI reading was only slightly below January’s 8-month high of 57.5 and reflect considerable momentum.
  • Taiwan scored a 52.7, the first above-50 reading since May.
  • Turkey’s PMI fell below 50.0 for the first time since last August, in contrast, and settled at 49.6.
  • The Russian manufacturing sector continues to struggle to expand, as the PMI printed down 0.1 at 50.7.  Such is below the long-term average score of 52.1.  High oil prices are a hopeful development for Russia as voters soon go to the polls there.
  • South Africa’s 57.9 surpassed expectations by a considerable margin.
  • The Australian PMI recorded its third straight low-50 result, a score of 51.3 versus 51.6 in January.

In other Australian data, building permits were 14.6% lower in January than a year earlier despite a monthly 0.9% increase.  Private-sector investment fell 0.3% last quarter, and the commodity price index in February was 3.5% lower than a year before.  M3 money grew 8.1% between January 2011 and January 2012.  New Zealand’s terms of trade fell 1.4% in 4Q11 from the third quarter.

Japan reported some upbeat news.  Instead of the expected drop, business investment shot up 7.6% in the fourth quarter of 2011, most in 19 quarters.  Motor vehicle sales in February were 31.9% higher than a year earlier.  Stock and bond transactions last week generated an outflow of JPY 1.257 trillion.  Japanese officials want the yen to depreciation and need capital outflows for that to happen.

Swiss GDP growth unexpectedly stayed in the black last quarter, ticking up 0.1% from 3Q and by 1.3% from 4Q10.  Third-quarter growth was revised up marginally to a quarterly gain of 0.3%.

Euro area unemployment increased to a fresh high of 10.7% in January from 10.6% in December and 10.0% a year earlier.  Youth joblessness was 21.6%.

Euroland CPI inflation ticked up a tenth to 2.7% in February instead of holding at 2.6% as was predicted.

The central bank in The Philippines cut its policy interest rates by 25 basis points for the second straight meeting, returning them to Great Recession lows.  The cut was anticipated by some but not all analysts.

Indonesian CPI inflation eased marginally to 3.6% in February.  Core inflation is at 4.6%.  Thailand posted on-year CPI and PPI inflation of 3.4% and 1.8% in February.  The volume of Hong Kong retail sales in January was a smaller-than-expected 9.1% greater than a year earlier.  South Korea’s February trade surplus surpassed expectations. India’s $14.8 billion trade deficit in January was 16% larger than the December deficit and embodied on-year import growth of 20.3%.

Portuguese industrial production and retail sales posted on-year drops in January of 4.1% and 8.5%. Icelandic CPI inflation accelerated to 6.2% in January from 5.3% in December. Sweden’s current account surplus of SEK 50.1 billion last quarter was 31.7% narrower than the 3Q11 surplus. 

In North America, Fed Chairman Bernanke delivers the Senate portion of his Humphrey-Hawkins testimony.  His failure yesterday to signal an inclination to do a third round of quantitative easing depressed gold prices sharply.  Pianalto, Williams and Lockhart are other Fed officials, who will be speaking publicly today.  Scheduled U.S. data releases are auto sales, jobless claims, construction spending, and personal income and spending.  Canada reports the 4Q current account and monthly PPI and raw material price data.  Both the United States and Canada will be releasing manufacturing purchasing manager survey results for February. 

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



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