A Nondescriptive June Tuesday

June 12, 2012

The dollar is unchanged against the euro and Swiss franc, up 0.1% versus the yen, and off 0.3% relative to the loonie and sterling and by 0.1% versus the yuan.  Bigger drops of 0.8% and 0.5% have occurred against the New Zealand and Australian dollars.

After Monday’s sizable drop in U.S. share prices, equities fell 1.0% in Japan, 0.7% in China, Taiwan, and South Korea, 0.8% in New Zealand and 0.4% in Hong Kong and Indonesia.  India’s bourse rose 1.2%, however, and stocks have risen so far by 0.7% in Spain despite a near record high in 10-year sovereign debt yields there.  Stocks also are 0.6% higher in Frankfurt and up 0.3% in Paris and London.

Sovereign debt yields also have advanced in Europe and the United States.  The 10-year Treasury and British gilt yields are four basis points firmer, and the 10-year German bund has increased nine basis points.

Oil and gold prices climbed 0.7% and 0.5% to $83.30 per barrel and $1604.30 per ounce.

Japan’s tertiary index of service sector activity slipped 0.3% in April.  Such had stagnated in 1Q, and April’s level was 0.7% below the 1Q average and up only 2.5% from April 2011.  Japanese domestic corporate goods prices fell 0.4% in May and by 0.5% from a year earlier.  Export and import prices respectively tumbled by 2.5% and 3.3% between April and May.

The IMF called the yen moderately overvalued.

Industrial production in India was merely 0.1% greater than a year earlier in April after having climbed by 5.3% in the previous year to April 2011.

Bank Indonesia’s policy reference rate was left steady at 5.75% as analysts were anticipating.

According to the NAB monthly gauges, Australian business conditions deteriorated to a reading of minus 4 in May from zero in April and +4 in March, while business confidence weakened six points to minus two.

British industrial production stagnated in April and posted a 14th straight on-year decline.  The 12-month drop was 1.0% in size.  Factory output unexpectedly fell by 0.7% on month and 0.3% on year.  The British house price balance index compiled by the Royal Institute of Chartered Surveyors printed at minus 16% last month,which was better than April’s minus 19% and better than market expectations, too.  The NIESR estimate of British GDP growth in February-April put such 0.1% above the level of GDP in November-January.

Three European nations reported consumer prices.  In Sweden, the CPI fell 0.1% in May and to a 12-month increase of 1.0% from 1.3% in the year to April.  Core inflation was only 0.9%. Portuguese consumer prices fell 0.4% last month, cutting the on-year pace from 3.0% to 2.7%.  Hungarian consumer prices dropped 0.2% on month but rose 5.3% on year in May.

Spain’s index of leading economic indicators slumped 1.6% in April, while the index of coincident indicators dropped 0.4%.  Non-farm French payroll employment climbed 18.3K last quarter, more than reversing the job loss incurred in the final quarter of 2011.  Iceland’s jobless rate fell to 5.6% in May.

The Swiss State Secretariat for Economics unveiled new macroeconomic forecasts.  GDP is projected to expand 1.4% in 2012 and 1.5% in 2013, while consumer prices are forecast to fall by 0.4% in 2012 and then rise just 0.5% next year.

U.S. import prices fell 1.0% on month in May, the biggest such decline in 23 months, and posted the first on-year drop (0.3%) since November 2009.  Export prices also declined between April and May, dropping 0.4%, and such were 0.1% lower than a year earlier.  Disinflation is picking up steam.

Small business sentiment in the United States according to the NIFB index dipped 0.1 points to 94.4 in May, which was a slightly better reading than expected.  In contrast, the IBD/TIPP optimism index weakened 1.8 points in June to 46.7 following an 0.8-point decline in May.

The U.S. ICSC index of chain store sales fell by 0.7% last week but exceeded its year-earlier level by 2.9%.  According to the Johnson Redbook gauge, chain store sales were only 2.0% higher than a year earlier in the week of June 9, down from a 3.1% on-year advance in the prior week.

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

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