Less Market Anxiety than on Monday

December 11, 2012

There is less worry today about Italy’s political outlook, as hope exists that Prime Minister Monti will run as a politician in February elections and prevent Berlusconi from regaining control of the government.

The FOMC’s two-day meeting begins today amid expectations for a sharp escalation by the central bank of its quantitative easing.

Monthly ZEW Institute German and Ezone survey results improved strongly in December.

Share prices in Europe have climbed 0.9% in Spain, 0.8% in Italy, 0.6% in France, 0.5% in Germany and 0.3% in Britain.  In the Pacific Rim overnight, stocks fell 0.6% in China and by 0.1% in Japan, India and New Zealand but rose 1.3% in the Philippines, 0.4% in Australia, Indonesia and South Korea and 0.2% in Hong Kong.

The dollar has settled back 0.3% against the euro, 0.4% versus the kiwi, and 0.1% against the Swiss franc and sterling.  The U.S. currency has edged up 0.1% relative to the yen, loonie and yuan, and it is unchanged compared to Monday’s closing level versus the Australian dollar.

Ten-year sovereign debt yields went up three basis points in Britain and by a single basis point in Japan and Germany.

Oil prices are 0.5% higher at $85.98 per barrel.  Gold has dipped 0.2% to $1711.10 per ounce.

China released money and credit figures for November.  The increase of 522.9 billion yuan in loans didn’t quite meet market expectations but was greater than in the previous month for the first time since August.  M2 money advanced 13.9% on year, below October’s 14.1% increase and a 3-month low.  M1 money also decelerated, printing at 5.5% after gains of 6.1% on year in October and 7.3% in September.  M0 money growth rose to 10.7% from 10.5% in October.

Japanese money growth remained subdued in November.  M1, M2, and M3 posted 12-month increases of 3.2%, 2.1%, and 1.9%, each marginally less than recorded in October and the third quarter.  Broad liquidity was only 0.3% above its year-earlier level.

New Zealand property values were 5.7% above their year-earlier level in November.  House prices went up 0.9% on month and 4.3% on year.

The National Australia Bank index of business confidence sank eight points to a 43-month low of minus 9, while business conditions stayed steady at minus 5.

Malaysian industrial production increased 0.6% in October and 5.8% from a year earlier.  Filipino exports were 6.1% higher in October than a year before.

Bank Indonesia as expected left its key central bank interest rate unchanged again at 5.75%.  The last change, a cut of 25 basis points, was implemented in February 2012.

German wholesale prices fell by 0.7% in November following a 0.6% drop in October.  The 12-month rate of increase slowed to a three-month low of 3.2% from 4.6% in the year to October.

The German ZEW Institute reported that investor expectations regarding the German economy improved from a negative 15.7 reading in November to +6.9 in December.  That was the first above-zero score since May.  Current conditions only edged 0.3 points higher, however, to +5.7.  The euro area expectations index swung from minus 2.2 in November to +7.6 in December, while the current situation improved 0.4 to a still deeply negative 79.9 reading.

French non-farm payroll jobs dropped 41.7K, or 0.3%, last quarter.

According to the Conference Board, Britain’s index of leading economic indicators fell 0.4% in November, while the index of coincident indicators was unchanged.  The British Royal Institute of Chartered Surveyors reported a deterioration of its house price balance index in November for the first time since July.  Such printed at -9% after -7% in October.

Consumer prices in Hungary dipped 0.1% in November and were 5.2% above a year earlier. Romanian consumer prices were unchanged on month and posted a smaller 4.6% on-year advance from November 2011.  Romanian industrial output also was unchanged on month and down 0.1% on year.

South African retail sales fell 1.7% in October and to a 12-month increase of 1.0% from 4.7% in the year to September.  Factory output in South Africa increased 1.2% in October and by 2.5% from a year before.

Several U.S. economic indicators get released today: the trade balance, the NFIB index of small business sentiment, the IBD/TIPP optimism index, wholesale inventories, the JOLTS index of layoffs and hirings, and weekly chain store sales.  Canadian trade data also arrive.

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

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