Pausing at the Solstice
June 21, 2013
After Thursday’s shock and awe, markets are taking stock of the damage. Equities fell in the Pacific Rim but have bounced in Europe.
- Overnight movement in the U.S. dollar has been inconsequential: drops of 0.4% against the Australian dollar, which hit a 33-month low yesterday, and 0.2% versus the kiwi, upticks of 0.2% against the yen and 0.1% relative to the yuan and sterling, and no net changes against the euro, Swissie and loonie. The Indian rupee has suffered through its weakest week in 21 months.
- Share prices dropped by 2.5% in Indonesia, 2.3% in the Philippines, 1.5% in South Korea, 1.3% in Taiwan, 0.8% in New Zealand, 0.6% in Hong Kong, and 0.4% in Malaysia and Australia.
- Japan’s Nikkei recovered 1.7%, however, and China’s market only dipped 0.2% as extreme pressure on the supply of money market cash subsided.
- In Europe, the Paris Cac and British Ftse show recoveries of 1.2% and stocks are up 0.8% in Italy and 0.6% in Germany and Spain. U.S. stock futures are up in what could be merely a dead cat bounce.
- Ten-year sovereign debt yields rose by a further four basis points in Britain, two bps in Japan and one bp in Germany.
- The price of gold rebounded 0.7% to $1294.40 per ounce, while that on WTI oil rose 0.6% to $95.68 per barrel.
Markets are assuming that the FOMC reduces monthly asset sales after its September 17-18th meeting.
At a meeting of Ezone finance ministers, a plan of details governing debt bailout money usage was reached. The ECB will not assume control of bank supervision in the EMU for close to another year and a half.
Bank of Japan Governor Kuroda said the central bank is prepared to modify policy if conditions change enough to warrant such, but there is not a predisposition to fine tune the plan on a regular basis. Kuroda expects recent financial market volatility to simmer down.
It’s been a light day from a data release standpoint. Still to come are Canadian retail sales and consumer prices. No U.S. releases are scheduled.
Meantime, A EUR 19.5 billion seasonally adjusted Ezone current account surplus for April, down from EUR 25.9 billion in March but second largest surplus in the past year. The unadjusted current account surplus in May 2012 – April 2013 of EUR 162 billion was 4.8 times greater than the surplus of EUR 33.9 billion in the previous twelve months. The Basic Balance, which combines the current account and long-term net capital flows, ballooned to EUR 246.1 billion in the latest twelve months from just EUR 14.7 billion in the prior one-year period. However, the Basic surplus in April alone was just EUR 6.1 billion in size.
British public finances were in better shape than feared last month. Total public sector borrowing totaled GBP 10.535 billion, about a billion pounds less than assumed, and the PSNB excluding intervention of GBP 8.8 billion was 44% smaller than in May 2012. Outstanding British public debt stood at 75.2% of GDP last month.
According to the Conference Board measure, Germany’s index of leading economic indicators ticked 0.1% higher in April, while the index of coincident economic indicators increased 0.2%.
Year-on-year Swiss M3 money growth slowed to 9.7% in May from 10.3% in April.
Italian wages were unchanged on month and up 1.4% on year, same as the month before, in May. Likewise, Icelandic wages were also flat on month in May but 5.5% above their year-earlier level. Dutch consumer spending recorded a larger on-year decline of 1.9% in April after dropping 0.7% in the year to March.
Consumer confidence in New Zealand rose only 0.2% in June.
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.