Greek Public Sector Involvement Debt Swap Secures 95.7% Participation

March 9, 2012

The dollar is trading higher by 0.5% against the euro, 0.4% versus the Swissie, 0.3% relative to the Canadian and Australian dollars, and 0.2% versus the yen, kiwi and sterling.  The yuan is steady and softer than 6.3100 per dollar.

Share prices advanced solidly in Asia but show scant net change in Europe.  Equities climbed 2.1% in India, 1.7% in Japan, 1.1% in China, 1.0% in Australia, and 0.9% in Hong Kong and South Korea.  The German Dax is up 0.2%, but the Paris Cac and British Ftse are off 0.2% and 0.1%.

Gold and oil prices have edged up 0.2% and 0.3% to $1701.70 per ounce and $106.88 per barrel. 

Ten-year sovereign debt yields are unchanged in Germany, Britain and Japan.

Greece’s PSI deal constitutes a 53.5% reduction of privately held sovereign debt.  Next steps in this process are for the ISDA to decide if a credit event has occurred, which if so would trigger CDS.  Also, EU finance ministers are conferencing by phone to decide whether to recommend the next installment of the troika’s aid package to Greece.

Greek GDP plunged 8.6% last quarter and by 7.5% from a year earlier.  CPI inflation slid to 2.1% in February from 2.3% in January.

Portuguese GDP slumped 2.8% in the year to 4Q11 and 1.6% in 2011 as a whole.

Central banks in Peru and Malaysia left their benchmark interest rates unchanged at 4.25% and 3.0%, respectively.  Both actions met expectations.

China reported several statistics.  Inflation decelerated more than expected but so did economic activity.

  • CPI inflation slowed to a 20-month low of 3.2% in February from 4.5% in January and a 2011 high of 6.5% in July.
  • Producer prices were unchanged from February 2011.  Such had risen 0.7% on year in January and by 7.5% between July 2010 and July 2011.
  • Retail sales recorded on-year growth of 14.7% in February, down from 18.1% in January and below forecasts of more than 17%.
  • Industrial output went up only 11.4% on year, down from 12.8% in January, 15.1% in the year to June 2011, and 14.9% in February 2011.
  • Fixed asset investment, which rose 23.8% last year as a whole, increased just 21.5% on year in January-February.
  • M2 money grew 13.0% in the year to February, a bit more than the decade-plus low of 12.4% notched in January and down from 17.2% in the year to January 2011.
  • Bank lending amounted to a smaller-than-forecast 710.7 billion yuan last month versus 738.1 billion yuan in January and 640.5 billion in December.

Japanese M2 money grew 2.9% in the year to February.  Such rose 3.0% in January-February from a year earlier matching the pace in 4Q11.  Broad liquidity was only 0.3% higher than in February 2011.  Bank lending of 0.6% on year excluding trusts remained anemic.

Australia posted its first trade deficit in 11 months.  The January shortfall of AUD 673 million was also the largest deficit in 22 months.  Analysts had anticipated a small surplus, but exports were 8% lower than in January 2011.

South Korean PPI inflation ticked up a tenth to 3.5% in February.

The German current account of EUR 8.0 billion in January was smaller than forecast, sharply down form EUR 21.2 billion in December but just 7% narrower than a year earlier.  The seasonally adjusted EUR 14.2 billion merchandise trade surplus was greater than EUR 13.8 billion per month in the fourth quarter or the average 2011 surplus of EUR 13.2 billion per month.  German consumer prices rose 0.7% on month in February, boosted by a 0.9% jump in energy.  On-year CPI inflation stood at 2.3% but a benign 1.6% excluding energy.

French industrial production rose 0.3% in January but was 0.6% lower than a year earlier.  Italian industrial output sank 2.5% on month and 5.0% on year when adjusting for variation in the number of working days.  These results undershot expectations.

British producer output prices last month firmed 0.6% on month and 4.1% on year, while the core PPI-O pace accelerated to 3.0% from 2.4%.  Producer input prices climbed 2.1% on month and by a higher 7.3% on year after 6.6% in the year to January. U.K. industrial production dropped 0.4% in January.  Analysts were looking for a rise of about that amount.  Production was 3.8% lower than in January 2011.  Factory output firmed a mere 0.1% on month and 0.3% on year.

Czech GDP in 4Q was 0.6% higher than a year earlier.  Hungarian GDP was 1.4% greater.  Romanian industrial output in January was 2.0% above a year before.

Canadian jobs contracted by 2.8 thousand last month.  Such were 120.5K or 0.7% higher than in February 2011.  Fewer job seekers nonetheless depressed the jobless rate to a three-month low of 7.4% from 7.6% in January.

In an hour, the U.S. Labor Department releases the U.S. jobs report, where analysts are looking for an employment gain of a bit over 200K.  At the same time, both Canadian and U.S. trade figures are due.  The U.S. also releases wholesale inventories, while Canada will be reporting quarterly productivity and unit labor costs.

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

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