Bernanke Put

February 27, 2013

Markets were reeling in the wake of Italy’s inconclusive election, but dovish remarks yesterday in round one of Humphrey-Hawkins testimony restored a better market tone that so far is holding.  Bernanke reprises his testimony today before the House Financial Services Committee, beginning at 15:00 GMT.

The dollar has fallen 1.1% against the yen, 0.2% versus the Swiss franc, Chinese yuan and sterling, and 0.1% against the euro but shows gains of 0.5% relative to the Aussie dollar, 0.3% against the kiwi and 0.1% versus the Canadian dollar.

Following yesterday’s 0.8% rebound in the Dow, European stocks so far have risen 0.9% in Italy, 0.8% in Spain and France, 0.3% in Germany, and 0.2% in Britain.

In the Pacific Rim, Japan’s Nikkei dropped 1.3%, but equities rose 1.1% in China and Indonesia, 0.7% in Australia and India, and 0.9% in New Zealand.

Ten-year German bund and British gilt yields are three basis points softer.  The 10-year JGB is down by a further two bps to 0.67%.  Italian auctions of sovereign debt not surprisingly produced higher yields in the wake of that country’s more uncertain political and fiscal outlook.

The price of WTI oil is unchanged at $92.66 per barrel.  Gold has retreated 0.6% to $1605.30 per ounce and is in danger of dropping under $1600.

Overall U.S. durable goods orders sank 5.2% in January but were just 0.5% lower than in January 2012.  Moreover, orders excluding transportation jumped 1.9% on month, and the core measure of non-defense capital goods orders excluding aircraft leaped 6.3% and were 5.1% higher than a year before.

British GDP dropped 0.3% between 3Q12 and 4Q12 but were up 0.3% on year, which was better than analysts had assumed.  Consumption showed more resilience than expected.

Euroland’s economic sentiment index improved 1.6 points to 91.1 in February.  Industrial confidence rose 4.6 points.  Service sector confidence was 2.3 points better.  The business climate index printed at minus 0.73, a rise of 0.36 points.

Euroland’s retail purchasing managers index fell back to a 2-month low of 44.5.  Retail activity has been contracting for a year and four months.  The German retail PMI dropped 3.4 points to match December’s score of 47.6, and France’s retail PMI fell 2.7 points to a six-month low of 44.3.  Italy’s retail PMI climbed 3.1 points to a five-month high of 44.3, however.

Ezone M3 money in November-January was 3.5% higher than a year before, down from a 3.7% pace in the fourth quarter.  Credit and loans to the private sector posted respective on-year drops in January of 1.1% and 0.9%.  Loans to corporations were 2.5% weaker than a year before.

Euroland’s indices of leading and coincident economic indicators rose 1.0% and remained unchanged, respectively, in the latest reported month.

Austria’s manufacturing PMI improved 0.7 points in February to a score of 49.3, signified a lessening rate of contraction.

German import prices ticked 0.1% higher in January and were 0.8% below their year-earlier level.  Energy and non-oil import prices posted monthly changes of 0.4% and negative 0.1%.  Export prices were flat on month and 0.3% higher on year.

French consumer confidence was unchanged at a weak 86 reading this month.

Sweden’s trade surplus of SEK 6.0 billion in January was larger than December’s SEK 0.7 billion but below a surplus of SEK 10 billion in January 2012.

Japanese total retail sales increased 2.3% on month in January but were 1.1% lower than in January 2012.  Large-store sales fell 3.5% on year, more than the 0.7% decline recorded in the year to 4Q12.

New Zealand’s trade balance swung back into deficit (NZD 305 million) in January.  A 0.1% dip in Australian construction completions was the weakest quarter in a year.  Hong Kong GDP was 2.5% higher on year last quarter.  South Korean consumer confidence had an unchanged 102 reading this month.

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

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