Disappointing Chinese Data and an Italian Debt Downgrade

March 11, 2013

On Friday, Fitch downgraded the rating on Italian sovereign Italian debt to BBB+ from A-.

Over the weekend, China released a disappointing mix of economic figures.

  • CPI inflation accelerated from 2.0% in January to 3.2% in February, most since April 2012.
  • A 12.3% on-year rise of retail sales last month was the least in a few years and down from 15.2% in both December and January.  China is supposed to be rotating growth toward personal consumption.
  • New lending totaled 620 billion yuan last month, over 10% less than forecast, after spiking to 1.07 trillion yuan in January.
  • On-year growth in industrial production of 9.9% also fell below expectations and was down from 10.3% in both December and January.
  • Money growth trends in February were widely dispersed.  M0 accelerated sharply to 17.2% from 4.4%, while M1 slowed to 9.5% from 15.3%.  M2 growth of 15.2% was down from 15.9% in January but up from 13.8% in December.
  • Fixed asset investment posted a 21.2% on-year advance in the first two months of 2013, and February’s gain was larger than January’s.
  • Producer prices recorded a 12-month 1.6% rate of decline in February, same as in January but less than half as much as the 3.6% on-year drop last September.

The U.S. dollar hasn’t moved much from its pre-weekend closing levels.  The buck is down 0.2% against the Swissie and loonie, off 0.1% relative to the Australian and New Zealand monies, unchanged against the yen and euro, up 0.1% versus sterling and 0.2% stronger against the yuan.

Japan’s Nikkei advanced another 0.5% today.  Stocks also rose 0.5% in Australia but dropped by 0.6% in China, 0.4% in Indonesia, 0.3% in the Philippines, and 0.2% in India.  Spanish and Italian equities are off by 0.9% and 0.6%.  The German Dax and Paris Cac are 0.2% softer, and the DJIA opened marginally lower after a solid gain last week.

Ten-year British gilt and German bund yields slid by five and two basis points.  The 10-year JGB is a basis point firmer at 0.66%.

The price of WTI oil fell by 0.6% to $91.40 per barrel.  Gold edged 0.1% higher to $1578.80 per ounce.

In a weak start to the new year, core domestic Japanese machinery orders plunged13.1% in January and were 10.3% weaker than their 4Q12 average level.  Foreign machinery orders dropped 4.8% on month.  Japanese M2 money was 2.9% higher in February than a year earlier.  That compares to on-year increases of 2.7% in January and 2.5% in 2012.

The seasonally adjusted German trade surplus of EUR 15.7 billion in January matched the monthly average in the final quarter of 2012.  The unadjusted EUR 13.7 billion surplus embodied export and import growth of 3.1% and 2.9% from January 2012.  There was an EUR 11.3 billion unadjusted current account surplus, similar to a surplus of EUR 11.0 billion in January 2012 but down from EUR 20.2 billion in December.

Keeping with Germany, real factory sales posted drops in January of 0.3% from December and 3.0% from a year earlier.  And labor costs went up 0.8% between 3Q12 and 4Q12 and were 2.9% greater than in the final quarter of 2011.  Labor cost growth of 2.6% in 2012 as a whole was similar to the 2.8% in 2011.

Swiss retail sales volume fell1.9% last quarter.

French industrial production performed more weakly than forecast in January, dropping 1.2% from December and by 3.5% from January 2012.

The on-year decline of Italian GDP last quarter was revised to 2.8% from 2.7%.  Czech GDP was 1.7% lower than in the final quarter of 2011.

Revised data showed on-year declines in Greek and Portuguese GDP of 5.7% and 3.8% in the fourth quarter of 2012.

Denmark posted a DKK 4.7 billion current account surplus in January.  Finland that month had an EUR 425 million trade deficit. 

Malaysia’s trade surplus of only MYR 3.3 billion in January was the smallest in 11 years.  A 16% on-year leap in imports was more than four times greater than the growth of exports.  India recorded a USD 14.9 billion trade deficit in February.  Exports were 4.2% higher than a year earlier.  Imports advanced 2.7%.

Norwegian consumer prices were 1.0% higher in February than a year earlier.  Denmark’s CPI in that span climbed 1.2%.  Norway’s PPI fell 2.8% in the year to January. 

No significant U.S. data are scheduled today.

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



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