Focus Shifts to Central Banks and Data

November 8, 2012

Taking a cue from the United States post-election sell-off, equities in the Pacific Rim fell by 2.4% in Hong Kong, 1.8% in China, 1.5% in Japan, 1.2% in South Korea, 1.0% in Singapore and 0.7% in Australia. 

European stocks are up 0.6% in Germany, 0.4% in France, 0.3% in Spain, and 0.2% in Britain.

Greek Prime Minister Samaras of New Democracy managed to obtain a narrow “yes” vote from parliament on another round of austerity.  This was needed to get the next round of aid from the Troika of Greek creditors.

The dollar rose 0.3% against the euro, 0.2% versus the Swiss franc, and 0.1% relative to the loonie and sterling.  The buck edged 0.1% lower against the yen and is unchanged versus the yuan and Australian dollar.

Ten-year sovereign debt yields slid a basis point in Germany, Britain, and Japan to 1.37%, 1.75% and 0.75%.

The price of gold is unchanged at $1714.50 per ounce.  Oil recovered 1.0% to $85.24 per barrel.

The Bank of England did not change its policy settings.  A quarterly Inflation Report will be released November 14, and minutes of this week’s policy meeting are to be published on November 21.  Background to today’s meeting can be found in my earlier preview.  Analysts were not expecting a change.

The ECB decision is expected shortly.  Draghi’s press conference begins at 13:30 GMT.

Bank Negara Malaysia left its overnight interest rate target unchanged at 3.0%.  This result was expected.

Bank Indonesia left its key reference rate at 5.75% as expected.

Several economic indicators were released by Japan.

  • Core domestic private machinery orders fell by 4.3% in September after dropping 3.3% in August.  September’s decline was twice as big as forecast and resulted in a 1.1% 3Q-over-2Q decrease.  On-year declines amounted to 7.8% in September and 4.6% in the third quarter.  Official expect core domestic orders to recover 5.0% in the fourth quarter.
  • The economy watchers index, derived from a survey of service sector workers, weakened to a reading of 39.0 in October from 41.2 in September, 43.6 in August and 44.2 in July.  The outlook component also fell, reaching 41.7 after 43.5.  Both results were lower than forecast.
  • The current account recorded an unadjusted surplus of JPY 504 billion in September, just 2/3rds as large as forecast and down from JPY 1.61 trillion a year earlier.  The seasonally adjusted current account swung to a JPY 142 billion deficit from a surplus of JPY 722 billion in August.  Exports sank 3.0% on month and by 10.5% on year.  The current account and long-term capital movements generated a JPY 3.935 trillion outflow in September.
  • The seasonally adjusted current account surplus in the first half of fiscal 2012 averaged JPY 405 billion per month and was 23% smaller than in the second half of fiscal 2011.
  • The customs trade deficit in October 1-20 was JPY 308 billion versus JPY 348 billion a year earlier.
  • Stock and bond transactions generated a JPY 224 billion capital outflow in October and an outflow of JPY 6.7 billion in the week to November 3.
  • Bank lending in October was up a measly 0.9% from a year before. 

Germany’s seasonally adjusted merchandise trade surplus was EUR 17.0 billion in September, very near to the EUR monthly average of EUR 17.1 billion but larger than the averages of EUR 16.0 billion per month in 2Q and EUR 14.2 billion in 1Q.  Exports sank 2.5% in September and by 3.4% from a year before.  The current account surplus in September was EUR 16.3 billion, significantly larger than forecast.

France recorded a EUR 5.0 billion trade deficit in September, a shade less than in August.  French officials project economic growth of 0.8% in 2013, twice as much as the European Commission is projecting from the group’s second largest economy.

Dutch consumer price inflation accelerated to 2.9% in October because of an increase in value added taxes.  Such had been 2.3% in September.

Irish CPI inflation slowed to 1.2% in October from 1.6% in September.  In harmonized terms, such fell to 2.1% from 2.4%.

Turkish industrial production rose 3.9% on month and 6.2% on year in September, beating analyst forecasts.

Greek unemployment climbed above 25% to 25.4% in August from 24.8% in July.  Czech unemployment edged up to 8.5% in October from 8.4% in September.  Swiss joblessness ticked up to 3.0% in October from 2.9% in September.

U.S. and Canadian trade figures will be released today.  Canada reports housing starts, while the U.S. releases weekly jobless claims.

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


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