More Disappointing News

April 27, 2012

S&P downgraded Spanish debt by two notches to BBB+ from an A rating previously and assigned a continuing negative outlook to such.

Spanish unemployment jumped from 22.85% in 4Q11 to 24.44% last quarter, which was only a smidgen less than the historical high point.  Spanish retail sales volume was 3.7% below a year earlier in March.  CPI inflation edged up two tenths to 2.0% in harmonized terms in April.

Italy’s auction produced mixed results.  Although the government managed to sell EUR 5.945 billion of debt, not far from the maximum amount sought, interest yields were significantly higher than at the previous auction, and the bid:cover ratios fell in the case of the 5- and 10-year components.

The Bank of Japan Board did not ease policy as much as some had hoped it would.  The JGB portion of the asset purchase plan was increased by JPY 10 trillion, but half of that incremental support is to be offset (sterilized) by a JPY 5 trillion reduction of fixed-rate funds-supplying operations against pooled collateral.  In subsequent remarks, Governor Shirakawa argued that fresh stimulus cannot be undertaken every month.  New quarterly macroeconomic forecasts were released, revising projected GDP growth to 2.3% this fiscal year and 1.7% next fiscal year from prior estimates of 2.0% and 1.6%, respectively.  Core CPI inflation was revised to 0.3% this fiscal year from a projection of 0.1% released in January and to 0.7% in fiscal 2013 from a prior forecast of 0.5%.

French consumer spending plunged 2.9% in March to 0.2% lower than in March 2011.

Japan’s manufacturing purchasing managers index slid to 50.7 in April from 51.1 in March, conveying a picture of near stagnation.  Industrial production in March recovered 1.0%, less than a third of the anticipated rebound after a drop of 1.6% in February.  Japanese core core CPI inflation (excluding both seasonal foods and energy) was negative 0.5% last month.

In market action overnight,

  • The dollar has fallen 0.4% against the yen, 0.2% versus the Aussie dollar and sterling, and 0.1% relative to the loonie and kiwi.  The greenback is 0.1% firmer against the euro and unchanged versus the Swissie and yuan.  The Swiss franc continues to trade very near to the SNB target ceiling of 1.2000 per euro.
  • Share prices fell 1.0% in The Philippines, 0.8% in Malaysia, 0.5% in Taiwan, 0.4% in Japan and Indonesia, 0.3% in Australia and Hong Kong, and 0.2% in China.  The Paris Cac, British Ftse and German Dax show modest rises of 0.4%, 0.2%, and 0.1%.
  • Ten-year German bund, British gilt, and Japanese JGB yields slipped by six, four, and two basis points.  The JGB is at 0.90%.  The Bank of Japan policy statement released today stressed a determination to promote a decline in long-term interest rates and risk premiums.
  • Spanish 10-year debt yields are a dozen basis points higher at 5.95% in the wake of the aforementioned ratings downgrade to BBB+ by S&P.
  • Gold and oil prices are each 0.3% softer at $1655.30 per ounce and $104.22 per barrel.

Japan released several economic statistics.  The jobless rate held at 4.5% in March.  Employment was 0.4% lower than a year earlier, but the job offers to seekers ratio ticked up to 0.76 from 0.75 in February and 0.73 in January.  Industrial production in the first quarter advanced 1.2% versus 4Q and 4.7% on year.  Total consumer prices climbed 0.5% in March both from February and March 2011.  Japan’s unique definition of core CPI, which does not exclude energy, climbed 0.5% on month and 0.2% on year.  Real household spending in March was 3.4% greater than a year earlier.  Total retail sales leaped 10.3% on year, and even large-store retail sales scored a rare positive on-year change (0.5%).  The distortion was seasonal.  Seasonally adjusted total retail sales were 1.2% lower than in February.  Housing starts and construction orders were respectively 5.0% greater and 0.3% lower than a year earlier in March.

German consumer confidence unexpectedly dropped to a reading of 5.6 in May from 5.8 in April and 6.0 in March.  British consumer confidence remained soft at minus 31 in April.

The Swiss index of leading economic indicators according to the KOF gauge improved to 0.40 in April, twice as high as forecast, from 0.09 in March.

Euroland’s index of leading economic indicators according to the Conference Board slid 0.3% in March.  The coincident index also fell, dipping 0.1%.

Swedish retail sales volume rose 4.5% in the year to March, up from a 12-month 3.5% advance in February.  Sweden’s SEK 4.8 billion trade surplus in March was less than half as much as EUR 11.2 billion a year earlier.  The first-quarter surplus of EUR 22.1 billion was also down from EUR 24.1 billion in 1Q11.

German import prices advanced 0.7% on month in March but posted a smaller 3.1% 12-month rate of rise after 3.5% in February and 11.9% in the year to February 2011.  Non-oil import price inflation remained steady at 1.4%.  Energy import prices were 13.1% higher than in March 2011.

French total producer price inflation slid in March to 2.0%.  Dutch producer prices were 4.0% higher in March than a year earlier, down from a 4.6% pace in the year to February.  Greece’s PPI advanced 1.2% on month and 6.4% on year last month.  Icelandic consumer prices rose 0.8% on month and 6.4% on year in April.

Italian retail sales rose 0.6% in February but just 0.1% on year.  Norwegian retail sales increased 8.7% between March 2011 and March 2012.  Irish retail sales edged 0.2% higher but were 1.0% lower than in March 2011.

Total producer prices in Singapore climbed 1.5% in March and by 2.5% from a year before.  The South Korean current account surplus last month amounted to $3.0 billion.  Factory output in Thailand was 3.2% lower than a year before in March.

The United States will release the first estimate of first-quarter GDP today, along with the final U. Michigan April consumer sentiment reading.  The Bank of Mexico is not expected to change interest rates after today’s policy meeting.

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

Tags: , , , ,


Comments are closed.