Another Day Closer to Yearend and a Downgrade of Greek Debt

December 6, 2012

The currency markets are mostly calm.  The dollar is unchanged against the euro and loonie, down 0.1% relative to the yen and sterling, and up 0.1% versus the yuan and Swiss franc.  The U.S. currency has lost 0.4% against the kiwi and 0.3% versus the Australian dollar.

Stock market movements overnight have been diverse.  Japan’s Nikkei rebounded 0.8% further, and the German Dax has thus far climbed 0.9%.  However, Italian share prices are down 1.5%, and the British Ftse and Paris Cac are little changed.  In the Pacific Basin, equities dipped 0.2% in China and Australia but firmed 0.5% in India and 0.4% in New Zealand.

Yields on 10-year German bunds and British gilts slid by two and one basis points.  The 10-year JGB is steady.  So is the $1694.50 per ounce price of goldOil edged 0.1% higher to $87.96 per barrel.

No breakthrough has been reported on the U.S. talks to blunt the yearend tsunami of fiscal austerity.

Greek unemployment climbed to a record 26.0% in September from 25.3% the month before.  S&P sliced the Greek credit rating by four notches and warned of a selective default.

As expected, the Bank of England left its policy settings unchanged. 

Likewise, the ECB Governing Council did not change its interest rate structure.  Pdt Draghi’s press conference starts at 13:30 GMT.

The Reserve Bank of New Zealand left its Official Cash Rate of 2.5% unchanged.

Revised Euroland 3Q GDP figures were released.  They still show a quarterly dip of 0.1% following a 0.2% decline in the second quarter and a year-over-year drop of 0.6%.  Personal consumption was unchanged.  Business investment dropped 0.7%.  Government spending slid 0.2%.  Net exports enhanced the growth rate by 0.3 percentage points, while inventories exerted a 0.2-percentage point drag.

German industrial orders snapped back 3.9% in October following a 2.4% slump in September.  Analysts were expected orders to recover no more than 1%.  The 12-month slide in orders was halved to 2.4%.  Total foreign orders and those for capital goods jumped 6.7%.  Domestic orders increased just 0.4%, however, after dropping 1.8% in September.

The German construction purchasing managers index showed a slower rate of contraction last month with a sub-50 reading of 48.4 after scoring a 44.6 in October, 48.6 in September and 47.8 in August.

French unemployment rose a tenth percentage point to 10.3% in the third quarter.

Australia reported better-than-forecast labor statistics.  The jobless rate fell 0.2 percentage points to a 3-month low of 5.2%.  Jobs increased by 13.9K on top of a 10.1K advance in October.  However, full-time workers dropped by 4.2K following a 17.6K rise the month before.  The participation rate slid a tenth percentage point to 65.1%.

Brazil’s service PMI was 52.5, up 2.1 points from 50.4 in October.  The Brazilian composite purchasing managers index of 53.0 was 2.3 points above the October reading.  Peru’s central bank is holding an interest rate policy meeting today.

JP Morgan’s world service-sector and composite PMI measures in November of 54.9 and 53.7 each constituted eight-month peaks.

Britain’s goods and services trade deficit widened 46% on month to GBP 3.64 billion in October.  The merchandise trade gap increased to GBP 9.539 billion from GBP 8.439 billion.  The Halifax index of British house prices increased 1.0% in November, cutting the 12-month drop to 1.3% from 1.7%.

Dutch consumer prices fell 0.4% last month and to a 2.8% on-year advance from 2.9% in October. 

Romanian GDP dropped 0.5% last quarter and 0.6% from the third quarter of 2011.  Hungary’s EUR 658 billion trade surplus in October was 32.4% smaller than in September but 14.5% larger than a year earlier.  The January-October surplus was almost identical in size to a year earlier.

South Korean GDP growth in 3Q was revised to just 0.1% from 0.2% reported initially.  It was the weakest quarter in 3-1/2 years and resulted in year-over-year growth of 1.5%.

Japanese stock and bond transactions generated a JPY 56 billion net capital inflow last week, down from an inflow of JPY 126 billion in the week of November 23.

Business sentiment in South Africa dipped to 91.7 in November from a 92.0 reading in October.  The South African current account deficit of ZAR 203 billion in 3Q was nearly identical to that in 2Q and equivalent to 6.4% of GDP.

U.S. jobless claims and Canadian building permits data get released today.  Both countries release labor statistics tomorrow.

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

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