Focus on Central Banks, Japanese Election and Euro Council Summit

December 13, 2012

Analysts are calling yesterday’s FOMC adoption of data-driven guidelines and additional Treasury security purchases a landmark step.

There were three other central bank meetings overnight.

  • The Bank of Korea left its 7-day repo rate at 2.75%, matching some but not all expectations.
  • The Filipino key overnight borrowing rate was kept at 3.5% as anticipated.
  • The Swiss National Bank did not change its exchange rate ceiling of 1.2000 francs per euro nor its 3-month Libor target interest rate of 0.0-0.25%.

The LDP, led by the nationalist and easy money advocate Shinzo Abe, appears likely to win Sunday’s lower parliamentary house election this Sunday.  The Fed’s aggressive easing is seen forcing the Bank of Japan to ease its policy as well.

Ahead of the semi-annual EU leaders summit in Brussels, euro zone finance ministers reached agreement on vesting the ECB with single supervisory responsibility over the group’s large banks (those with at least EUR 30 billion of assets).

No breakthroughs have occurred in the U.S. fiscal cliff budget talks.

British Chancellor of the Exchequer Osborne testifies today on his austere Autumn Budget Statement of last week.  Osborne’s strategy has become increasingly controversial given that British growth has been much weaker than assumed and that the fiscal deficit has not been reduced nearly as much as projected.

The dollar shows scant change from Wednesday closing levels.  The greenback is up 0.2% against the yen and 0.1% versus the euro, Swissie, Australian dollar, Chinese yuan and sterling.  The buck has dipped 0.1% against the kiwi and is unchanged against the loonie.

Share prices fell 1.1% in China, 0.7% in India, 0.6% in the Philippines, 0.5% in New Zealand, 0.4% in Indonesia, and 0.3% in Hong Kong.  In contrast, stocks jumped 1.7% in Japan, 1.4% in South Korea, 0.9% in Taiwan, and 0.5% in Singapore.  Australia’s bourse closed unchanged.  In Europe, the German Dax, British Ftse, and Paris Cac are trading 0.4%, 0.2%, and 0.1% lower but stocks in Spain and Italy have edged 0.1% higher.

Gold tanked 1.5% in the wake of the Bernanke press conference and has moved below $1700 per ounce to $1692.60.  Oil prices are off 0.7% at $86.13 per barrel.

The 10-year Japanese JGB yield is up 3 basis points.  The 10-year German bund and British gilt yields are off two and one basis points.

New Zealand’s business purchasing managers index fell back below the 50 no change level to a reading of 48.8 in November from 50.3 in October.  Such had been under 50 each month of 3Q, averaging 48.5 in the quarter.  New Zealand consumer confidence rose 0.5% in December versus a 3.3% gain in the prior month.  Food prices in New Zealand fell for a third straight time, dropping 0.8% on month in November and by 0.6% from a year earlier.

Australian motor vehicle sales were unchanged on month and up 9.7% on year in November.  Expected inflation in Oz according to the MI-TD monthly gauge slowed to a new low for the move of 1.8% in December from 2.2% in November and 2.6% in October.

Japanese stock and bond transactions last week generated a JPY 740 billion net capital outflow following a JPY 56 billion outflow in the previous week.

Filipino M3 money and bank lending posted 12-month increases of 8.6% and 14.2% in October, following gains of 7.5% and 14.2% in September.

Industrial production and producer prices respectively fell in Hong Kong by 0.1% and 1.5% in the year to 3Q12.

Industrial trends in Britain according to the CBI monthly index improved to a three-month high reading of minus 12 in December from minus 21 in November and minus 23 in October. 

Italian consumer prices slipped 0.2% in November and posted a 12-month 2.5% increase, down from 2.6% in the year to October.  Spanish consumer prices slid 0.1% last month and rose 2.9% from November 2011.  Irish CPI inflation on an EU harmonized basis slowed to 1.6% in November from 2.1% in October. makes Sweden’s harmonized headline and core CPI were 0.8% higher than a year earlier in November.  The Swedish jobless rate increased to 8.1% seasonally adjusted in November from 7.7% and to 7.5% on an unadjusted basis from 7.1% in October. 

Greece’s unemployment rate climbed 1.2 percentage points on quarter to 24.8% in 3Q12.  Greek import price inflation slowed from 4.9% in the year to September to 2.8% in October as a result of a 1.8% monthly drop in the index. 

Dutch retail sales volume fell 2.8% in the year to October.  Finnish retail sales, not including autos, rose 3.8% in the year to October, whole wholesale turnover went up 5.7% in that statement year.  Spain’s indices of leading and coincident economic indicators respectively rose 0.1% and held steady in October. 

The prestigious German IFO Economic Institute released downwardly revised forecasts for GDP growth and inflation next year of 0.7% and 1.6%, respectively.

The Swiss officials statistical agency, SECO, unveiled new growth projections of 1.3% next year and 2.0% in 2014.  The forecast for CPI inflation in 2013 was revised to 0.2% from 0.5%.

South African producer prices rose 0.3% in November and matched October’s on-year advance of 5.2%. 

U.S. scheduled data today feature retail sales and producer prices and also include business inventories and weekly jobless insurance claims.  Canada reports house prices and capacity utilization.  The monthly ECB Bulletin was published.  The Bank of Japan’s quarterly business survey gets published at 08:50 JST on Friday (23:50 GMT tonight).

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

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