Investors Brace for End-Month Flood of Information

July 31, 2012

Dollar movement overnight was limited to gains of 0.1% against the yen and sterling and losses of 0.3% versus the yuan, 0.2% against the euro, kiwi and Australian dollar, and 0.1% relative to the Swiss franc.  The loonie is unchanged against its U.S. counterpart.

Share prices advanced 2.1% in South Korea, 1.6% in Taiwan, 1.1% in Hong Kong and Indonesia, 0.7% in Japan and New Zealand, 0.6% in the Philippines and Australia, and 0.5% in India.  The Spanish IBEX, up 1.0% and led by bank stocks, leads European markets, where the German  Dax is 0.5% higher but the Britiish Ftse is 0.2% softer.  The Paris Cac has edged up 0.1%.

The yields on 10-year British gilts and German bunds are four and two basis points lower.  The 10-year JGB edged up another basis point.

Oil and gold prices firmed by 0.4% and 0.3% to $90.10 per barrel and $1628.90 per troy ounce.

Investors hope the Fed on Wednesday and the ECB on Thursday ease policy.  The Bank of England also meets Thursday.

The Reserve Bank of India did not ease its stance, asserting that containing inflation remains its most pressing priority.

As always, the cusp between months brings a deluge of data releases.

The flash estimate of CPI inflation in the euro area remained unchanged at 2.4% in July.  Italian consumer price inflation slowed to 3.0% but edged 0.1 percentage point higher on a harmonized basis to 3.7%.  Italian producer prices firmed 0.2% in June and were 3.3% above a year earlier.

Euro area unemployment stayed at an all-time peak of 11.2% in June.  That’s up from 11.0% in March, 10.7% at end-2011 and 10.0% in June 2011. 

German unemployment rose for a fourth straight time, climbing by 7K in July following increases of 17K in April, 1K in May and 7K in June.  The jobless rate has been at 6.8% each month in 2012 but slid on a normalized ILO basis to 5.4% in June from 5.5% in May.  Employment firmed 0.2% in 2Q12 and was 1.2% greater than in 2Q11, down from on-year growth of 1.4% in 1Q12.  Italy’s jobless rate unexpectedly increased to 10.8% in June from 10.6% in May.

German retail sales volume once again proved weaker than forecast, dipping 0.1% in June after a 0.3% monthly decline in May.  Sales rose 0.1% in the second quarter and were 0.7% greater than in the second quarter of 2011.  Sales in the first half of this year surpassed the year-earlier level by just 0.7%, down from a 1.3% gain in full 2011.

Real consumer spending on a volume basis in France edged 0.1% higher in June but dipped 0.2% in the second quarter.  June spending was 0.2% above a year before.  In Spain, retail sales volume posted on-year declines in June of 4.3% unadjusted and 5.2% seasonally adjusted. 

French domestic producer prices sank 0.9% in June.  Import prices fell 0.5%, while total producer prices posted a fall of 0.8% from May and posted a gain of only 1.3% from a year earlier.  Hungarian producer prices slumped 1.6% in June, cutting the 12-month increase to 6.9% from 7.8% in the year to May.

British consumer confidence held steady at a weak reading of negative 29 for a third straight time in July.  Considerable concern has been voiced about the number of unsold tickets to events at the London Olympic games. 

The Swiss UBS consumption indicator improved to 1.60 in June from a reading of 1.02 in May.

Danish unemployment rose in June by 0.1 percentage points to 6.3% seasonally adjusted and 4.3% not adjusted.  Belgian unemployment ticked up to 7.2% in June.  Spain’s current recorded a EUR 755 million deficit in May.  Greek retail sales were 10.3% lower than a year earlier in May.  Hungarian unemployment remained in double digits last quarter at 10.9% after an 11.2% reading in 1Q.

Japan released several statistics.

  • The jobless rate plumbed to a 9-month low of 4.3% in June even though employment was 0.1% below its year-earlier level.  The job offers-to-seekers ratio continued to grind upward and, at 0.82, was at a 45-month high.
  • Real household spending slumped 1.3% on month in June, reversing May’s 1.5% increase and cutting the 12-month increase to 1.6% from 4.0% in the year to May.  Real disposable income was 3.7% higher than in June 2011.
  • The manufacturing purchasing managers index dropped two whole points to 47.9 in July.  Such had averaged 50.4 in the second quarter and 50.8 in the first quarter of this year.  Yesterday, officials downgraded the assessment of industrial production to “appears to be flat.”
  • Housing starts posted a 0.2% on-year dip in June, much weaker than previous advances of 7.5% in February, 5.0% in March, 10.3% in April and 9.3% in May.
  • Construction orders were 4.6% higher than in June 2011.  Such on average had been 7.7% higher in April-May than a year before.
  • Labor cash earnings were 0.6% lower than a year earlier in June.

Weak export demand produced Taiwan’s first decline in GDP (0.2%) in three quarters, prompting officials to cut projected growth in 2012 as a whole a to mere 2.1%.  South Korean industrial production fell 0.4% in June and was just 1.6% greater than a year before.  Malaysian producer prices fell 0.9% between June 2011 and June 2012.  Thailand posted a $1.6 billion trade surplus in June, almost three times wider than in May. 

Australian building permits, which had soared 27.3% in May, only fell back 2.5% in June.  As a result, the 12-month increase reached a buoyant 10.2%.  M3 money meanwhile accelerated to on-year growth of 9.2% from 8.4% in May.  Australia’s economy has been helped by monetary easing.  In New Zealand, the business sentiment index improved to a score of 15.1 in July from 12.6 in June, while M3 growth slowed to 5.7% in June from 6.3% in May.  Turkey’s trade deficit narrowed 16.3% in June.

Scheduled U.S. data releases today include personal income and spending, the employment cost index, the Chicago and other Midwestern PMI survey results, consumer credit, the Case Shiller home price index, the Conference Board gauge of consumer confidence, and weekly chain store sales.  Canada releases monthly GDP, PPI, and raw material price figures.  U.S. Treasury Secretary Tim Geithner speaks publicly.

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

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