Yellen Confirmed by Senate

January 7, 2014

The senate approved the nomination of Janet Yellen as the next Fed Chairperson by a comparatively underwhelming 56-26 margin.  Many Republicans opposed the choice on principle, and there were several absentees caused by America’s deep freeze that stymied traveling.

The dollar rose overnight by 0.5% against the Australian dollar, 0.4% relative to the loonie, 0.3% versus the Swiss franc and 0.2% vis-a-vis the yen but slid 0.1% against the euro and sterling.  The kiwi and yuan are steady.

Japan’s Nikkei dropped another 0.6% and is further below 16K.  Share prices also fell 0.6% in Indonesia, 0.5% in India, and 0.2% in Australia.  Chinese equities closed unchanged.  In Europe, stocks have risen 1.6% in Spain, 0.8% in Italy, 0.6% in Germany, 0.4% in Britain, and 0.3% in France and Switzerland.

The ten-year British gilt and German bund yields are unchanged, while the 10-year Japanese JGB yield retreated three basis points to 0.68%.  In another sign of subsiding intra-Ezone financial strains, the Irish-German 10-year sovereign debt spread narrowed to the smallest differential in 45 months.

WTI crude oil firmed 0.5% to $93.89 per barrel. Gold edged 0.1% higher to $1,239.00 per ounce.

For the first month since the launch of Abenomics, the Bank of Japan’s balance sheet failed to expand impressively in December.  In fact such rose only 0.1 trillion yen to JPY 224.2 trillion.  Likewise, growth in Japan’s monetary base slowed to 46.6% year-over-year in December from 52.5% in November.  The base expanded 34.4% in 2013 versus 2012.

Three pieces of upbeat German data were released today.

  • The construction purchasing managers index climbed 1.6 points to 53.7 in December, a four-month high.
  • Unemployment fell by 15K last month, more than reversing a 9K increase in November.  Unemployment was 32K higher than at end-2012, but the jobless rate of 6.9% was the same as a year earlier.  And in standardized ILO terms, unemployment in Germany is only 5.2%.
  • German retail sales advanced by 1.5% in volume terms in November and were 0.8% higher on average in October-November than the mean 3Q level.

Ezone consumer price inflation ticked 0.1 percentage point lower to 0.8% in December.  That’s a big drop from 2.2% between December 2011 and December 2012.  Core inflation was just 0.7% in the latest month, down from 0.9% in November and 1.5% at end-2012.

Producer prices in the euro area slid 0.1% in November and were 1.2% lower than a year before. 

French consumer confidence improved a point to a reading of 85 in December.

Sweden’s service-sector purchasing managers index went up another 0.7 points to 57.7 in December after increasing by 3.3 points in November.

British new car registrations were 23.8% greater in December than a year earlier.

In the year to November, producer prices rose 0.6% in Hungary and 0.3% in Brazil but fell by 0.3% in Romania and by 4.2% in the Philippines.  Austrian wholesale prices were 1.5% lower in December than a year before.  Filipino consumer prices climbed 0.7% on month in December and accelerated to a 4.1% 12-month rate of increase.

Australia’s trade deficit narrowed more than expected to A$ 118 million in November from A$ 358 million in October and A$ 271 million in September.

U.S. and Canadian trade data also get reported today.  The Canadian IVEY-PMI index and U.S. weekly chain store sales arrive, too.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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