Second Week of August Begins Quietly

August 6, 2012

The dollar rose 0.5% against sterling, fell 0.4% against the yen, and is otherwise pretty stable with upticks of 0.1% versus the euro, Swiss franc, kiwi, Aussie dollar and yuan but a 0.2% dip relative to the loonie. 

Share prices remained upbeat in continuing reaction to Friday’s U.S. jobs report and to hope that a framework is being built to get ample aid to Spain and Italy.  In reality, both the U.S. labor market and the euro debt crisis remain fraught with risk.  Spanish and Italian 10-year sovereign debt yields remain too high at 6.76% and 6.03%.

  • Equities rose 2.0% in Japan and South Korea, 1.7% in Hong Kong, 1.4% in China, 1.3% in India, 1.2% in Vietnam and Australia, and 1.0% in Taiwan.
  • In Europe, the Paris Cac and German Dax are 0.6% stronger, while the British Ftse and Spanish IBEX have firmed 0.2% and 0.3%.

The yields on 10-year British gilts and German bunds fell by seven and five basis points.  Their Japanese counterpart is unchanged. 

Oil prices eased 0.5% overnight to $90.94 per barrel.  Gold prices edged up 0.1% to $1611.30 per troy ounce.

The Sentix gauge of investor confidence in the euro area worsened 0.7 points to a reading of minus 30.3 in August.  That was the fifth consecutive month of incremental deterioration from a negative score of 8.2 in March.

Germany’s construction purchasing managers index slid 1.4 points to a fourth straight sub-50 reading of 44.6 in July.

Greek CPI inflation held steady at 1.3% in July.  Consumer prices dropped 1.4% on a sequential monthly basis.

Britain’s Halifax house price index fell 0.6% in July and was also 0.6% lower in May-July than a year earlier. 

On-year growth in Swedish services production slowed to 1.1% in June from 1.9% in May.

European car sales were 9.3% greater in July than a year before.

Czech industrial production slid 0.3% in June and by 2.2% from a year earlier.  Construction output was 8.4% weaker than a year earlier after posting a 3.5% on-year decline in May.  The Czech trade surplus widened 30.5% on month to CZK 29.41 billion in June.

Japan’s index of leading economic indicators dropped 2.6 points to 92.6 in June.  The coincident index sank 2.0 points to 93.8 and printed as a diffusion-expressed reading of 20.0, a 14-month low after 60.0 in May and 80.0 in April.  This result prompted officials to reclassify the assessment of the coincident index as “weakening” from “improving” over the four previous months.  Japan’s political situation has meanwhile become more precarious, as Prime Minister Noda’s cabinet faces a possible censure vote over its push to increase the sales tax sharply.  Lower House parliamentary elections are possible next month.

Indonesian GDP growth of 6.37% on year last quarter surpassed analyst expectations and was led by business investment.  Net foreign demand exerted a drag on growth.  Consumer confidence in Indonesia, which had spiked 5% to a reading of 114.4 in June, eased back only 0.9 points to 113.5 in July.

Australian job ads slipped for a fourth straight time in August, falling 0.8% on month.  The TD-MI gauge of expected inflation in Australia slid 0.1 percentage points to 1.5% in July.

No U.S. data releases are scheduled today.  Fed Chairman Bernanke speaks publicly today.

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

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