Less Investor Angst than Earlier this Week

July 26, 2012

The dollar and yen have eased in tandem by 0.8% relative to the kiwi, 0.6% versus the Aussie dollar, and 0.5% against the euro, Swissie, loonie, and sterling.  The dollar also has edged 0.1% lower against the Chinese yuan.

Stocks in the Pacific Rim rose 0.9% in Japan, 0.8% in New Zealand, 0.7% in South Korea, 0.6% in Australia, and 0.5% in Singapore and Vietnam, but share prices fell 1.2% in India, 0.7% in Malaysia, and 0.5% in China.  In Europe, equities are up by 0.8% in Spain, 0.6% in France, and 0.4% in Great Britain but off 0.1% in Germany.

Ten-year sovereign debt yields are significantly lower in Spain and Italy at 7.29% and 6.31%.  British gilts and German bund yields, in contrast, have risen by four and three basis points, and the 10-year JGB is a basis point higher at 0.74%.

Oil prices dipped 0.1% to $88.87 per barrel. Gold prices are steady at $1613.30 per ounce.

Comments from officials have been reassuring.

  • ECB President Draghi said the central bank will do what needs to be done to aid the euro.
  • A statistical authority in Beijing predicted further monetary policy easing in the second half of 2012 and believes China’s economy will bottom out this quarter.
  • Bank of Japan Governor Shriakawa testified in parliament today.

The Reserve Bank of New Zealand did not change its Official Cash Rate, which has been at a record low of 2.5% since March 2011.

Bangko Sentral ng Pilipinas surprised most analysts with a 25-basis point interest rate cut in the Philippines.  Such follows cuts taken last January and March.

South Korean real GDP underperformed expectations in the second quarter, rising just 0.4% versus a 0.9% advance in 1Q and posting the smallest on-year advance (just 2.4%) since the third quarter of 2009.  Earlier this month, the Bank of Korea eased unexpectedly by 25 basis points.

Japanese corporate service prices in June slid 0.1% lower on month and by 0.3% on year.  Between March and June the CSP index fell 2.1% at an annualized rate.  Japanese stock and bond transactions generated a smaller JPY 203 billion outflow last week versus an outflow of JPY 1.25 trillion in the week of July 14.

Industrial production in Singapore expanded 3.9% in June, much faster than forecast, and posted a 7.6% increase from a year earlier.

German consumer confidence ticked higher to a reading of 5.9 in August from 5.8 in July.  German import prices fell 1.5% on month in June and to a 12-month 1.3% rate of increase from 2.2% in the year to May and an average gain of 8.0% in full-2011.  Non-oil import prices dropped 0.2% on month and rose 1.6% between June 2011 and June 2012.  Export prices eased 0.3% on month and rose 1.4% on year.

Euroland M3 money grew 3.2% in the year to June and 3.0% between the second quarter of 2011 and 2Q12.  Loans to the private sector were 0.2% smaller in June than a year earlier.  Mortgage lending expanded 0.8%, while loans to non-financial firms fell by 0.6%.  Money and credit growth point to subdued inflation in the medium term.

Italian retail sales fell 0.2% in May but posted a smaller on-year decline that month of 2.0%.  Hourly wages last month were 1.5% higher than in June 2011.

Swedish producer prices edged up 0.2% in June and were 0.4% higher than a year before.  Sweden’s jobless rate was 8.8% in June despite a 1.0% on-year rise in jobs.  Overall economic sentiment posted a fourth straight drop, printing at 96.1 after 98.4 in May, but consumer confidence increased 2.5 points to a reading of 5.6.  Sweden’s SEK 9.6 billion trade surplus in June was SEK 2.1 billion wider than in June 2011, and the surplus in the first half of 2012 of SEK 44.2 billion compares to SEK 36.3 billion in 1H11. 

Poland’s jobless rate in June continued to show a 12-handle at 12.4%, but retail sales were 6.4% greater than in June 2011. 

The Greek trade deficit widened 25.7% on month to EUR 1.32 billion in May.

Producer prices in South Africa jumped 4.4% in June.  In year-on-year, PPI inflation failed to drop as forecast and instead remained at 6.6%.

Scheduled U.S. data to be released today are the K.C. Fed manufacturing index, pending home sales, durable goods orders, natural gas inventories, and weekly jobless insurance claims. 

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

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