Central Bank Day

September 5, 2013

The Bank of Japan left its policy settings unchanged but expressed greater enthusiasm about the recovery’s progress.  Since April, the BOJ has engaged in heavy quantitative easing to achieve a 2% inflation rate.

Bank Negara Malaysia retained a 3.0% key overnight interest rate, its level since May 2011.  The move was expected and made against the backdrop of soft growth, rising but still subdued inflation, a shrunken current account surplus, and a softer exchange rate.

Sweden’s Riksbank Executive Board did not tweak its policy, either.  The key 1.0% interest rate is expected to stay there until the end of next year, and inflation is unlikely to rise to the 2% target before 2015.  As previously, there were two dissenters in the decision, preferring a 25-basis point rate cut and lower rate path in the future.

The Bank of England kept a 0.5% interest rate and a GBP 375 billion asset purchase program ceiling.

Still to come: European Central bank and Czech National Bank.

Sovereign debt yields are up five basis points in the U.K., three bps in Germany, and a basis point in Japan.  The 10-year U.S. Treasury yield climbed closer to 3.0%.

The dollar is unchanged versus the euro, yuan and sterling, up 0.3% relative to the yen, Australian and New Zealand dollars, up 0.2% versus the Swissie but 0.1% softer against the loonie.

Equities rose 2.2% in India, 1.0% in South Korea, 1.1% in Taiwan and 0.1% in Japan, but such lost 0.4% in Australia and China and 0.6% in Indonesia.

Australia’s A$ 765 million trade deficit in July was considerably greater than forecast.

South Korean GDP advanced 1.1% on quarter and 2.3% on year in 2Q13.  Finnish GDP edged up 0.2% on quarter but remained 1.2% lower than in 2Q12.

Japanese stock and bond transactions generated a JPY 492 billion net capital inflow in the final August week, reversing a JPY 644 billion outflow in the prior week.

Dutch and Filipino CPI inflation slowed to 2.8% and 2.1% in August. 

The German construction purchasing managers index rebounded to 55.1 in August, indicating the fastest pace of expansion since March 2012, after dropping to 51.5 in July from 54.5 in June.

German industrial orders sank 2.7% in July due to a 4.5% slump in foreign demand.  The 12-month increase of total orders declined to 2.0% from 5.6% in the year to July.

The ECB press conference begins at 12:30 GMT.  Scheduled U.S. data today are weekly jobless insurance claims, the ADP estimate of private employment, factory orders, and the ISM non-manufacturing PMI survey results.

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

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