Strong Reactions in Stocks, Bonds, Oil and the Dollar

September 14, 2012

Overseas markets overnight continued to react to the Fed’s announced QE3 plan, which will be more open-ended than its two predecessors.

The euro is trading near its daily high of $1.3097 and also stronger on its crosses.  The U.S. currency is 0.8% weaker against the common European currency since Thursday’s close and shows other losses of 0.6% against the Swiss franc, 0.5% relative to the Aussie dollar and sterling, 0.4% against the loonie, 0.3% versus the kiwi and 0.2% against the yuan.  The yen has dropped 0.7% against the dollar.

The Nikkei rallied 1.8%.  In other Pacific Rim markets, stocks advanced by 2.9% in Hong Kong, 2.5% in India, 2.1% in Taiwan and Indonesia, 1.6% in the Philippines and 1.2% in Australia.  China’s market rose by a smaller 0.7%, but in Europe, stocks are up 2.7% in Spain, 2.2% in Italy, 2.0% in France, and 1.5% in Germany and Britain.

Oil shot up 1.8% and is above the key $100 per barrel level at $100.12.  Gold, up 0.3% at $1777.2 per ounce, has moved only modestly after Thursday’s big climb.

The ten-year German bund and British gilt yields are each twelve basis points higher this morning.  Treasury yields are also indicated much higher.  Peripheral sovereign debt yields continued to recede, in contrast, and the 10-year JGB is three basis points lower.

Officials at the Bank of Chile left their main interest rate steady at 5.0%.  The decision met expectations.  The rate was last changed in December 2011.

Euroland reported a 0.4% increase in consumer prices last month, resulting in an on-year pace of 2.6% after three straight readings of 2.4%.  That’s 0.7 percentage points above the target ceiling.  Core inflation, however, eased to 1.5% from 1.7% in July and matched the 12-month increase in August 2011.  Energy prices jumped 2.4% on month and by 8.9% on year versus a 12-month increase of 6.1% in the year to July.

In somewhat of a surprise, jobs in the euro area were unchanged in 2Q12 versus the first quarter, but they still were 0.6% lower than a year earlier.  Employment had fallen 0.5% in the year from 1Q11 to 1Q12.

Revisions slashed Swedish 2Q real GDP growth in half to 0.7% with inventories exerting a 0.5 percentage point drag.  GDP climbed only 1.3% from a year earlier.

Home prices in Spain plunged 14.4% in the year to 2Q12.  Prime Minister Rajoy continues to stall in committing to the terms of the Draghi aid plan.

Japanese industrial production was revised to show a marginally smaller but still significant 1.0% decline in July.  A 1.2% drop had been reported initially.  Output was 0.8% lower than in July 2011.  The inventory ratio leaped 3.7% from June and by 9.9% from July 2011.  Capacity usage rose 0.5% and by 2.6% on year, while capacity was 1.7% lower than in July 2011.

Food prices in New Zealand edged up 0.1% in August but were 0.5% lower than a year earlier.

Indian WPI inflation accelerated disturbingly to 7.6% last month from 6.9% in July. 

Retail sales in Singapore posted a 2.9% drop between July 2011 and July 2012. 

Industrial production in Hungary fell 1.2% on month and 2.2% on year in July.  In January-July, output was 0.3% softer than a year before.

Ireland’s trade balance widened 12.3% to EUR 3.9 billion in July.  Italy posted a EUR 1.6 billion current account surplus in the same month.

Scheduled U.S. data releases today feature retail sales, industrial production, consumer prices and the U. Michigan consumer sentiment index.  Canada’s monthly survey of manufacturers arrives.  EU finance ministers meet today in Nicosia.

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

Tags: , ,


Comments are closed.