Fresh Anxiety Grips Financial Community

May 29, 2013

Share prices have slumped by 1.6% in Hong Kong and Germany, 1.4% in France, and 0.7% in Spain and Italy.  Japan’s Nikkei edged up 0.1%, and the British Ftse is over 1% stronger.

Sovereign debt yields continue to climb faster than officials would like to see.  The U.S. 10-year treasury yield is getting closer to the psychologically and technically significant 2.25% level.  The JGB is up to 0.93%, and the German bund is up three bps at 1.52%.

Gold is up 0.8%, while oil has eased 0.4%.

The dollar is weaker against both the yen and euro.

German May labor statistics were weaker than expected.  Unemployment climbed 21K, four times greater than expected.  The jobless rate stayed at 6.9%, however.

The OECD published new forecasts, downgrading expected world growth this year to 3.1% followed by 4.0% in 2014.  Among the members of the OECD, a group of developed economies, GDP is projected to rise just 1.2% in 2013 and 2.3% next year.

The Bank of Thailand’s policy interest rate was sliced for the first time since last October in response to a softer global economy than assumed previously producing risks to Thai domestic demand.  Thai GDP in 2013 is projected at 4.2-5.2%, and inflation should stay within target.  The new interest rate becomes 2.5%, down from 2.75%. 

Britain’s distributive trades index fell by ten points to -11 in May.  Analysts were expected a slightly improved reading.

Worries that the Fed will soon scale back quantitative easing continue to swirl.

Ezone M3 growth accelerated to 3.2% in April from 2.6% in March due to stronger M1 money expansion of 8.7%, up from 7.1% in the year to March.  The data had weak properties, too.  Loans to non-financial firms recorded a larger 3.0% 12-month decline after dropping 2.4% in the year to March.  Private credit contracted 0.9% on year, and marketable instruments plunged by 14.2%.

Singapore producer prices sank 8.1% in the year to April. 

German CPI inflation accelerated in May, rising 0.4% on month and by 1.5% on year after a 1.2% pace in April, which constituted a 2-1/2 year lowpoint.

Icelandic CPI inflation remained at 3.3%.

Japanese retail sales advanced 0.7% on month in April and dipped by a lesser 0.1% on year.  Large-scale retail sales were 2.3% lower than in April 2012 after on-year drops of 1.4% in 4Q12 and 1.6% last quarter.

Italy’s business sentiment index printed higher than forecast at 88.5 in May following an 87.9 reading in April.

Swedish GDP expanded 0.6% last quarter, surpassing expectations.  The year-over-year increase accelerated to 1.7% from 1.4%.

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


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