FOMC Day Among Other Things (Like the First Estimate of 4Q U.S. GDP)

January 30, 2013

The yen fell to its lowest dollar level (91.43) since June 7, 2010 and its weakest quote against the euro (123.89) since May 4, 2010, while the Nikkei-225 closed above 11,000 for the first time since May 5, 2010.  The euro reached its strongest level against the dollar (1.3564) since November 22, 2011.

On balance overnight, the dollar has risen 0.6% against the yen, 0.7% relative to the kiwi and 0.4% versus the Aussie dollar, but the U.S. currency shows net losses of 0.5% against the Swiss franc and 0.4% against the euro.  The dollar is 0.1% softer versus sterling and the yuan but 0.1% firmer against the loonie.

Share prices jumped 2.3% in Japan, 1.1% in New Zealand, 0.7% in Hong Kong, 0.5% in China, 0.8% in Singapore, 0.4% in Taiwan and South Korea, 0.3% in Indonesia and 0.2% in Australia.  In Europe, stocks are down 2.0% in Italy but just 0.2% in Spain and 0.1% in Frankfurt and Paris.  The British Ftse has edged 0.1% higher.

Ten-year German bund and British gilt yields rose three basis points, and the 10-year Japanese JGB yield is a basis point firmer.

Oil and gold prices have risen by 0.4% to $97.91 per barrel and 0.2% to $1665.60 per ounce.

The FOMC statement is due at 14:15 (17:15 GMT).  There is no press conference afterward.

Ezone retail purchasing manager survey results and economic sentiment data for January were released.

  • Euroland’s retail PMI improved 1.4 points, which is more than was forecast, to a 4-month high of 45.9.  This was also higher than the 2012 mean of 45.3.  Germany’s retail PMI jumped 3.4 points from an 8-month low in December of 47.6 to print in January at 51.0, a 7-month peak.  The French retail PMI, in contrast, recovered just 0.2 points to 47.0 and was below the 50 expansion-or-contraction threshold for a tenth straight time.  Italy’s retail PMI was lower than 40 for a fourth straight month with a reading of 37.5 after 36.8 in December and 35.5 in November.
  • Euroland’s economic sentiment index climbed to a 7-month high of 89.2 from 87.8 in December and a recent low of 85.2 in October.  Industrial sentiment went up 0.3 points to negative 13.9, which also represents a 7-month high.  Consumer confidence printed at minus 23.9 after minus 26.3, and service sector confidence rose a full point to minus 8.8, best since July.  Retail sentiment rose by 0.3 points, and construction sentiment at minus 28.2 was 5.1 points stronger than the December reading.
  • Euroland’s business climate index of -1.09 in January was just 0.02 better than in December but 0.52 points above October’s low.

Business sentiment in Italy fell disappointingly to a reading of 88.2 in January from 88.9 in December.  Analysts had projected a higher index than the month before.  Portuguese consumer confidence improved 1.1 points in January, while business sentiment was 0.1 point better than in December.  Sweden’s economic tendency index in January (89.4) was not quite as good as expected.  The UBS Swiss consumption indicator rose 0.11 points to a reading of 1.34 last month, but the KOF index of Swiss leading economic indicators slid to 1.05 in January from 1.29 in December.

Spanish national income accounts confirmed an intensifying recession last quarter.  GDP sank 0.7% from 3Q12 and by 1.8% from a year earlier.

Portuguese industrial production and retail sales were 4.1% and 5.6% lower in December than a year earlier after drops of 4.3% and 5.3% in the year to November.

The ECB only allotted EUR 3.7 billion in the 3-year LTRO, less than was expected and yet another sign of lessening strain in the banking system.

British M4 money contracted 1.0% in the year to December.  U.K. mortgage approvals hit an 11-month high of 55.8K in December, exceeding analyst forecasts.  Net mortgage lending amounted to GBP 1.7 billion.  Consumer credit of GBP 649 million also surpassed expectations. 

Austria’s manufacturing purchasing managers index rose a half point to a reading of 48.6 in January, the seventh sub-50 score in a row nonetheless.  Austrian producer prices in December were merely 0.3% above their year-earlier level.  Belgian CPI inflation fell to 1.5% in January from 2.2% in December, and Dutch PPI inflation of 2.8% in December was below November’s pace of 3.7%.  Icelandic producer prices increased 1.2% between end-2011 and end-2012.

Australian Prime Minister Gillard called elections for next September 14. 

New Zealand building permits jumped 9.4% in December, best in nine months.

The highly respected economist, Stanley Fisher, a former mentor to Fed Chairman Bernanke, announced he is stepping down as Governor of the Bank of Israel

Unrest has escalated further in Egypt.

Japan’s government approved a JPY 92.6 trillion budget for fiscal 2013 in which 46.3% of spending is to be covered by debt.

Japanese retail sales rose 0.1% in December from November, less than anticipated, and was just 0.4% greater than in December 2011 versus a 2.2% advance in 2012 as a whole versus 2011.  Large store sales were unchanged from December 2011 and 0.7% lower in 4Q than a year before.  In December-over-December comparisons, supermarket sales rose 0.7%, but department store sales fell by 1.0%.

South Korean industrial production was just 0.8% higher than a year earlier in December.  The South Korean current account surplus of $2.25 billion that month was the lowest since April and down from $6.91 billion in November.

South African M3 growth slowed to a 5.2% increase in December from 6.3% in November, whereas private sector credit expanded 10.1%, faster than the 9.6% increase in the year to November.

Brazilian PPI inflation accelerated from 6.6% in November to 7.2% last month.

U.S. mortgage applications fell back 8.1% last week, erasing a strong gain in the prior week.  Aside from an FOMC meeting and the initial estimate of fourth-quarter U.S. GDP, investors also await the ADP estimate of monthly private sector jobs growth.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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