Japan, Spain and Greece in Spotlight

November 26, 2012

Minutes from the Bank of Japan’s October 30 Policy Board meeting accentuated the difficulty of overcoming deflation, with two of the nine members believing more stimulus is needed to boost inflation to the 1% target.  In a speech today, Governor Shirakawa acknowledged that the economy has weakened but deflected responsibility for ultimately overcoming deflation to households and businesses.

Regional elections in Catalonia over the weekend saw gains for the separatists but reduced likelihood that a referendum on independence will be held soon.

European finance ministers (Ecofin) held a conference call Saturday ahead of today’s face-to-face meeting in Brussels. Progress was reported.  They are meeting to hammer out details of an accord on Greece to approve the next installment of aid from the troika of creditors.  One rumor suggests a willingness to consider a further haircut in what Greece owes.

The dollar has risen 0.3% against the kiwi and loonie, 0.2% relative to sterling, the euro and Swiss franc, and 0.1% against the Australian dollar.  The yen softened initially but now shows a net 0.3% drop against the dollar.

Ten-year sovereign debt yields are down by four basis points in the United States, two bps each in Germany and Britain, and a basis point in Japan.

Share prices mostly rose in the Pacific Rim but are lower in Europe and North America.  Equities rose 1.1% in Taiwan, 0.6% in Indonesia, 0.3% in Australia, and 0.2% in Japan and India.  Stocks have lost 0.6% in Spain, 0.7% in France, 0.5% in Britain, 0.4% in Italy, and 0.2% in Britain.  The DOW lost 0.5% quickly at the open, and China’s market closed 0.8% weaker.

Oil prices fell 0.8% to $87.57 per barrel.  The price of gold edged 0.1% lower to $1750.10 per ounce.

Consumer confidence unexpectedly dropped in Germany and Italy.

  • German consumer sentiment slid to 5.9 from a revised 6.1 reading in November.
  • Italian consumer confidence sank 1.6 points to a record low of 84.8.

Economic sentiment in the Czech Republic weakened 1.7 points to a reading of minus 5.0.  Business confidence fell 2.3 points to 0.3 but was mitigated by a 0.7-point rise in consumer confidence to a reading of negative 26.3.

Brazilian consumer confidence fell 1.7 points in November to a score of 120.0.  Mexico’s trade balance swung from a $0.26 billion surplus in September to a deficit of $0.78 billion in October.

Mortgage approvals in Spain were 32.2% lower than a year earlier in September.

Economic sentiment in Hungary improved 2.2 points to minus 22.4 in November.  Retail sales in Hungary were weaker than forecast in September, however, dropping 0.4% on month and by 3.1% from a year earlier.

Poland’s jobless rate ticked upward to 12.5% in October from 12.4% the month before.  Polish retail sales posted a slightly smaller-than-forecast on-year increase of 3.3% in October.

The volume of Finnish retail sales rose 0.7% in October.  Finnish producer prices dropped 0.5% last month, retaining a 12-month increase of 1.7%.

Greece’s trade deficit widened 12% on month to EUR 1.12 billion in September. 

Swiss employment increased 1.2% on quarter in 3Q12.

Industrial production in Singapore recorded a larger-than-anticipated 12-month decline of 2.1% in October, but such was less than the drop of 2.8% in the year to September.  Thai imports surged 21.6% on year in October.  Despite a 15.6% rise in exports, the trade balance swung to a $2.47 billion deficit from a surplus in September.

The Bank of Israel, whose interest rate was cut last month, is not expected to change policy further after today’s monthly review.

The Chicago Fed National Activity Index unexpectedly deteriorated to minus 0.56 in October from a reading of zero in September.  The Dallas Fed manufacturing index will be released later today.

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

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