Some Hope Returns to the Market

July 10, 2012

News that the Eurogroup of Ezone officials announced plans for faster loans to Spanish banks pushed 10-year Spanish sovereign debt yields back to 6.90% from 7.07%. 

China’s trade surplus surpassed expectations in June.  At $31.7 billion, such was easily the largest surplus of 1H12.  There was a $68.8 billion surplus in the second quarter after a tiny $1.2 billion net surplus in 1Q12.  On-year import growth of 6.3% in June lay between May’s 12.7% and April’s 0.3% and fell short of expectations.  Export growth of 11.3% slowed less sharply than had been forecast.

Italian industrial production rose 0.8% in May, rebounding from a 2.0% April drop.  Analysts had anticipated a decline of more than 0.5%.  Output was still 6.8% lower than a year earlier.

European stocks show gains so far today of 1.7% in Spain, 1.5% in Germany, 1.4% in France and 1.0% in Great Britain.  Asian bourses had been mixed with gains of 1.5% in Thailand, 1.3% in India, 1.2% in Singapore and 0.6% in Indonesia but losses of 0.4% in Japan, China and South Korea, 0.5% in the Philippines and Australia and 0.8% in Taiwan.

Ten-year JGB yields are unchanged at 0.8%.  Ten-year German bunds rose three basis points but remain very low at 1.35%.  British gilt yields climbed two bps.

Gold prices rose 0.4% to $1594.80 per ounce.  Oil edged 0.2% lower to $85.81 per barrel.

The dollar has weakened 0.6% and 0.5% against the Australian and New Zealand dollars, but it is otherwise largest steady.  There has been no change against sterling or the euro, a dip of 0.2% versus the loonie, and marginal 0.1% losses to the yuan and yen.  The dollar edged 0.1% higher relative to the Swiss franc.

Australian business conditions, a measure compiled by the National Australian Bank, improved three points to a reading of negative 1 last month, but business confidence softened a point to minus 3 and was 7 points weaker in June than in April.

Japanese consumer confidence unexpectedly softened to a score of 40.4 in June from 40.7 in May but remained better than the April reading of 40.0.

Japanese money growth remained anemic in June.  Broad liquidity rose just 0.2% from June 2011.  M1, M2, and M3 money posted on-year increases of 3.3%, 2.2%, and 2.0%.  These gains were smaller than those in 2011 as a whole.

Britain announced a smaller-than expected trade deficit in May.  The goods and services shortfall narrowed 33.5% on month to GBP 2.717 billion.  The merchandise trade deficit of GBP 8.383 billion followed a deficit of GBP 9.709 billion in April.

U.K. industrial production jumped 1.0% in May, beating forecasts of a 0.2% dip.  The average level in March-May was still 0.3% lower than in the previous three months and down 2.1% from a year earlier.  Factory output advanced 1.2% in May but posted a 1.7% on-year drop.

The house price balance index of Britain’s Royal Institute of Chartered Surveyors worsened five points in June to a reading of minus 22%.  According to the British Retail Consortium, same-store sales were 1.4% higher than a year earlier in June, and total sales advanced by 3.5%.

French industrial output slumped 1.9% in May, more than reversing April’s advance of 1.4%.  Output was 1.3% weaker than in May 2011.

Greek industrial production was 2.9% weaker than a year before in May.  Dutch and Finnish industrial output posted respective on-year declines of 0.5% and 1.7%.  Swedish industrial production jumped 3.5% in May but was 3.3% lower than a year before when adjusting for variations in the number of working days.  Swedish industrial orders increased 4.5% on month but fell 3.3% on year in May.  Romanian industrial production dipped 0.2% on year.

The 12-month rates of Norwegian CPI and PPI inflation in June were +0.5% and negative 0.2%.  Core CPI inflation was at 1.2%.  Romanian consumer prices increased 2.0% in the year to June.

Several lower-tier U.S. indicators get released today:  the NFIB small business sentiment index, the Labor Department JOLTS index of job openings and layoffs, the IBD/TIPP optimism index, and weekly chain store sales.  Britain’s NIESR Institute will report an early estimate of 2Q GDP growth.  Canada reports housing starts.  St. Louis Fed President Bullard speaks publicly, and the baseball all-star game gets played tonight in Kansas City.

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

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