Japanese GDP Released on Otherwise Quiet Monday

August 13, 2012

Overnight dollar movements have been modest, with gains of 0.3% against the kiwi, 0.2% versus the Australian dollar, and 0.1% relative to the loonie and sterling but losses of 0.2% against the euro and Swissie and 0.1% versus the yen.  The yuan is steady following a weekend in which the People’s Bank of China failed to ease its monetary policy stance further as many thought it would.

Chinese stocks tumbled 2.0%.  Equities also fell 0.9% in Indonesia, 0.7% in South Korea, 0.3% in Hong Kong and 0.1% in Japan, but bourses strengthened 0.5% in New Zealand, 0.4% in Singapore, 0.5% in India, and 0.1% in Malaysia and Australia.  In European trading, the German Dax, Spanish IBEX and Paris Cac are up 0.3%, 0.2% and 0.1%, while the British Ftse has edged 0.1% lower.

The ten-year German bund and British gilt yields have climbed four and three basis points, whereas their Japanese counterpart edged back under 0.80% to 0.79%.

Oil prices advanced 0.8% to $93.58 per barrel, and gold prices rose 0.2% to $1626.40 per ounce.

Mitt Romney chose Wisconsin Representative Paul Ryan as his Vice Presidential running mate.  Ryan, the architect of the Republican congressional fiscal proposal, is very popular with the most conservative wing of the party.

The London Olympics ended with no security failures.  Romney, the organizer of the 2002 Salt Lake City winter games, had questioned whether proper security precautions were taken to handle the London games without incident.

Japanese GDP grew more weakly last quarter than consensus street expectations.  Nominal GDP contracted marginally, and real GDP slowed from a first-quarter pace of 1.4% (5.5% annualized) to a gain of 0.3% (1.4% annualized) in 2Q12.  The GDP price deflator slid 0.5% annualized between 1Q and 2Q and by 1.1% from a year earlier. 

A lower house Japanese election in the early autumn is looking increasingly likely.  The LDP has a decent shot of retaking power.

Greek GDP posted an ninth consecutive on-year decline in the second quarter, but the drop of 6.2% was less than feared and smaller than a decline of 6.5% between 1Q11 and 1Q12.

The French current account deficit widened to EUR 4.9 billion in June from EUR 4.0 billion in May and EUR 4.4 billion in April.

German politicians over the weekend continued to complain that Greece has not implemented promised fiscal reforms adequately.

German wholesale price inflation reversed direction, rebounding to 2.0% in July after falling to 1.1% in June from 3.0% in January and 8.2% in July 2011.  Prices for mineral oil and solid fuels jumped 1.5% on month and by 4.7% on year.

Dutch retail sales rose 1.0% in June, only about half as much as forecast, and by 4.0% from a year earlier. 

An Italian auction of EUR 8 billion of one-year government bills produced a higher 2.77% interest rate, 7 basis points above the prior result.

Ireland’s construction-sector purchasing managers index dropped further below the 50 no-change threshold, printing at a 10-month low of 42.2 in July after 42.5 in June, 46.3 in May and 45.3 in April.  The input price component moved back below 50 for the first time in three months.

The volume of Norwegian retail sales fell 1.1% in June, twice expectations, but held on to a 7.4% on-year increase.

The Czech current account deficit widened to CZK 9.13 billion in June from CZK 8.16 billion in May.  Turkey’s current account deficit narrowed to $4.25 billion from $5.71 billion in May.

Food prices in New Zealand ticked only 0.3% higher on month in July and recorded a 1.8% decline from a year earlier.

No U.S. data releases are scheduled this quiet Monday.  The newest worry about the U.S. economy concerns food prices, which are feared likely to soar due to massive crop damages from drought and heat.

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

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