Awaiting the Fed’s Press Conference

December 12, 2012

There’s been no breakthrough in the U.S. fiscal negotiations.  House Speaker Boehner rejected the White House plan of $1.4 trillion of budget cuts.

The FOMC is expected to announce an aggressive extension of quantitative easing.  The existing Operation Twist is scheduled to last only through end-2012.  The FOMC decision will be announced at 12:30 EST, and a Bernanke press conference is scheduled for 14:15 EST.

Dollar movements reflect some appetite for risks.  The U.S. currency climbed 0.4% against the yen but has lost 0.2% relative to the euro, Swiss franc, sterling, and Australian and New Zealand dollars.  The loonie is up 0.1%, and the yuan is unchanged against the buck.

Equities advanced 0.8% in Hong Kong and Singapore, 0.6% in Japan and South Korea, 0.5% in Malaysia, 0.4% in China and Indonesia and 0.2% in Australia.  Stocks lost 0.8% in New Zealand and 0.2% in India, and they are down 0.2% in France.  Elsewhere in Europe, stocks have risen by 0.3% in Spain and Italy and by 0.2% in Britain and Germany.

Ten-year British gilt and German bund yields are four and two basis points higher today.  The JGB yield is steady.  Greece’s 10-year yield hit a 20-month low.

Oil and gold prices advanced 0.6% and 0.3% to $86.29 per barrel and $1714.90 per ounce.

Japanese domestic corporate goods prices were unchanged in November and posted the smallest on-year drop (0.9%) since May.  Import prices fell 0.5%, while exports prices were 0.2% softer last month.

Japanese core domestic machinery orders recovered 2.6% in October after dropping 4.3% in September.  They were 1.5% below the 3Q average level and just 1.2% higher than in October 2011.  Public sector orders for machinery plunged 18.7%, while foreign machinery orders jumped by 9.4% on month while falling 12.8% from a year earlier.

Japan’s tertiary index, which measures activity in the services sector, dipped 0.1% in October but surpassed the year-earlier level by 1.1%.

Consumer confidence in Australia dropped to -4.1% in December, the first decline since August.  The November reading was +5.1%.

Industrial output in India recorded the largest on-year gain (8.2%) in October since mid-2011.

Sri Lanka’s central bank reduced its key interest rates by 25 basis points, surprising analysts.

South Korea’s jobless rate stayed at 3.0%.  The government in Seoul has requested an emergency meeting of the U.N. Security Council to protest North Korea’s successful launch of a satellite.

The Swiss ZEW index of investor expectations strengthened to minus 15.5% in December from minus 27.9% in November.  The Swiss National Bank holds a quarterly monetary policy review tomorrow, with interest centered on the possibility that officials might seek a further depreciation of the franc against the euro.

Industrial production in the euro area posted a 1.4% decrease in October after sliding 2.3% in September.  Output was 3.6% lower than a year earlier.  Production of capital goods and energy respectively dropped by 3.0% and 1.5% from the month before.  Between October 2011 and October 2012, output slumped by 16.2% in Ireland, 6.2% in Italy, 3.9% in Portugal and the Netherlands, 3.3% in Spain, 3.0% in France and 3.8% in Germany.  October production was 2.7% lower than the third-quarter mean.

British monthly labor statistics showed

  • A 3.0K decline in the claimant unemployment count.  Analysts had predicted a 7K advance.
  • An ILO jobless rate in August-October of 7.8%, which was as expected.
  • On year growth in total worker pay and pay excluding bonuses of 1.8% and 1.7% in August-October, which were a shade less than assumed.

French consumer prices in November slid 0.2% on month and rose 1.6% on year in harmonized terms, which was less than in October and below expectations.

German consumer price inflation dipped to 1.9% in November from 2.0% in September and October.  Non-energy inflation was just 1.6%.

Sedlabanki, the central bank of Iceland, left its key seven-day collateralized lending rate at 6.0%.  An unexpected 25-basis point increase had been implemented on November 14.  That had been the sixth increase since a trough of 4.25% from February to August of 2011.

The Dutch trade surplus of EUR 3.9 billion in October was smaller than September’s surplus of EUR 4.1 billion.

South African CPI inflation held steady at 5.6% in November.  Prices posted a monthly uptick of 0.2%.

U.S. mortgage applications rose 6.2% last week.  The 3.47% 30-year fixed rate mortgage rate was down 5 basis points and at a series low-point.  Other scheduled U.S. data are import prices and the November Federal budget figures.  The FOMC meeting is today’s main event.

Twelves are wild on this 12th day of the 12th month of 2012.

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

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