Data Highlight Disinflation But Bond Yields Rise

May 14, 2013

The 10-year Japanese JGB yield jumped another ten basis points to 0.84%.  The 30-year JGB auction had a yield of 1.775%, 28 basis points higher than the prior one.  Ten-year German bund and British gilt yields are a basis point firmer.  Spain’s auctions of six- and twelve-month sovereign paper drew a decent response with lower yields.

German consumer prices fell 0.5% in April and to a 12-month increase of 1.2% from 1.4% in March, 1.5% in February, 1.7% in January and 2.0% in December.

German wholesale prices posted back-to-back monthly drops of 0.2% in March and April and were 0.4% lower than in April 2012.

In other price data released today, Spanish and Italian CPI inflation each printed at 1.4% in April, respectively down from 2.4% and 1.6% in March.  Swedish consumer prices fell 0.2% on month in April and posted a 0.5% on-year decline after being unchanged between March 2012 and March 2013.  CPI inflation slowed to 1.7% in Hungary in April from 2.2% in March.  Finnish CPI inflation dipped to 1.5% from 1.7% in both February and March.  Greek import prices plunged 4.3% in the year to March. Indian wholesale price inflation slowed significantly further to 4.89% in April from 5.96% in March.  Japanese domestic corporate goods prices rose 0.3% in April but export and import prices respectively dived by 1.2% and 1.0% on month.

The dollar shows scant overnight change, with dips of 0.2% against the yen and 0.1% versus the yuan and upticks of 0.3% relative to the Australian dollar, 0.2% against the Canadian dollar, and 0.1% relative to the kiwi, euro, and sterling.  The Swiss franc is unchanged against the greenback and up 0.1% on its euro cross.

Commodities retreated further, with both gold and oil off 0.5% at $1427.40 per ounce and $94.69 per barrel. 

Equities were mixed in the Pacific Basin but have traded lower in Europe.  Share prices closed down 1.5% in China, 0.6% in New Zealand, 0.3% in Hong Kong and 0.2% in Japan but rose 1.0% in South Korea, 0.5% in Indonesia, 0.2% in Australia and 0.1% in Singapore.  In Europe, the Spanish IBEX slumped 1.0%, and the Paris Cac and Milan MIB are off 0.5%.  The German Dax has lost 0.3%, while the British Ftse is 0.2% lower.

According to the Conference Board, the British index of leading economic indicators advanced 0.4% in both March and April, but the index of coincident economic indicators stagnated in the latest month.  The Royal Institute of Chartered Surveyors’ British house price index printed in positive territory for the first time since mid-2010, rising three points to +1.0% in April.

Industrial production in the euro area advanced by a greater-than-anticipated 1.0% in March, buoyed by a 3.8% increase in energy.  The 12-month rate of contraction eased to 1.7% from 3.2% in the year to February.  Production rose on a monthly basis by 2.1% in Spain, 4.5% in the Netherlands, 5.6% in Portugal and 1.7% in Germany but dropped 0.8% in both France and Italy.  Overall industrial production was 0.8% greater in March than the 1Q average level.

ZEW Institute measures of investor sentiment toward the euro area and Germany were disappointing in May.  The Ezone expectations index had fallen to 24.9 in April from 42.4 in February and only recovered 2.7% of the fall in May.  Current conditions actually worsened 0.8 points on month to negative 76.8 in May.  For Germany, ZEW reported a 0.1-point dead-cat bounce to 36.4 in May after a 12.2-point plunge in April, and the current situation sub-index weakened by a further 0.3 points to 8.9.  Such had been at 13.6 in March.

There were other reported signs of weak global demand.

  • Dutch retail sales in March were 5.3% lower than a year earlier.
  • New Zealand retail sales volume rose by a less-than-forecast 0.5% last quarter after climbing 1.9% in the final quarter of 2012.
  • Polish GDP edged up 0.1% in the first quarter after stagnating in 4Q12 and was just 0.4% higher than in the first quarter of 2012.
  • France posted another current account deficit in March, albeit smaller at EUR 2.9 billion than the shortfalls of EUR 5 billion in each of the prior two months.
  • Japanese machine tool orders sank more sharply on year, 24.1%, in April than their 21.5% plunge in the year to March.
  • Australia’s government revised FY12/13 and FY13/14 budgets to account for softer growth than assumed previously.  Deficits of A$ 19.4 billion and A$ 18 billion are now predicted, postponing the projected return to fiscal balance until fiscal 15/16.
  • The latest tranche of aid to Greece was approved at the Eurogroup meeting in Brussels.
  • ICSC/Goldman Sachs’ index of U.S. chain store sales fell 2.0% in the week of May 11, halving the year-on-year increase to 1.2%.  Cold weather in the nation’s heartland was an adverse factor.

As expected, Bank Indonesia left its reference interest rate at a record low of 5.75%, where such has been since a cut in February 2012.

Small business confidence in the United States improved this month much more discernibly than expected according to the latest NFIB measure, which printed at 92.1 after a reading of 89.5 in April.  Canada releases house prices today.

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

Tags: , ,


Comments are closed.