Slow But Constructively Solid Start to Week of Christmas 2014

December 22, 2014

Last week’s post-FOMC rally in share prices remained intact in Asian and European trading.  Stocks rose 1.9% in Australia, 1.3% in Hong Kong, 1.2% in India, 1.6% in Singapore, and 1.1% in Taiwan.  Lesser gains were achieved in South Korea of 0.7%, China of 0.3%, and Japan of 0.1%, but equities in Europe so far show have advanced so far today by 0.9% in France, Germany and Switzerland, 0.7% in the U.K., 0.6% in Italy and 0.4% in Spain.

All is quiet on the western front.  Wednesday eve will mark the centennial anniversary of the famous Christmas truce during the first year of the first world war.  There were dovish remarks by some members of the ECB Governing Council, but not from its German delegation.

Japan’s 10-year JGB yield dipped a basis point to a new low for the move of 0.33%.  The 10-year German bund and British gilt yields are steady.  The 2-year German bund sank to negative 0.1%.

Among commodities, WTI oil is 0.9% above the Friday close at $57.62 per barrel.  At an OPEC conference in Abu Dhabi, the recent decision not to cut production quotas was reaffirmed.  Natural gas, in contrast, has fallen over 5% and is at the lowest price since August 2013.  Gold continues to trade just south of $1,200 per ounce.

The dollar is narrowly mixed, with drops of 0.3% against the Swissie, 0.2% versus the kiwi and 0.1% relative to the Australian dollar, no change against the loonie and small gains of 0.2% against the yen and 0.1% versus the yuan, euro and sterling.

The Russian ruble extended Friday’s rebound by over 3%, aided by signs of Beijing’s willingness to undertake a currency swap with Moscow.  Chinese officials express confidence in Russia’s longer term economic outlook.

A member of the Bank of England’s Monetary Policy Committee, David Miles, said there’s no need to extend the accommodative monetary policy stance further because of the recent drop in British CPI inflation well below target.

The government of South Korea reduced its projections for 2015 economic growth to 3.8% and CPI inflation to 2.0%.  The government of North Korea threatened more reprisals if western nations respond to its alleged hacking of Sony. 

Urban tensions in the United States surrounding the relationship of community to law enforcement are even more strained following the assassination of multiple policeman over the weekend.

German import prices fell 0.8% on month, which exceeded expectations, and 2.1% on year in November.  Between November 2013 and November 2014, energy prices fell 15.9%, while all other import prices increased by 0.6%.  German real wage earnings rose 1.8% on year last quarter, accelerating from 12-month advances of 1.5% in the prior two quarters.

The Swiss current account surplus of CHF 11.16 billion in the third quarter was 36% bigger than in 2Q but 41% narrower than in the same quarter a year before.  Swiss M3 money growth accelerated to 3.6% on year in November from 3.4% in October.

Swedish retail sales rose 0.5% last month, a shade less than forecast, keeping the 12-month rate of advance steady at 4.5%.  On-year Danish retail sales growth slowed to just 0.8%, however, and the Danish consumer sentiment index dipped to 6.0 in December from 6.3 in November.

The Greek current account deficit of EUR 199 million in October was 37% narrower than a year earlier.  The year-to-October surplus of EUR 3.6 billion was was 71% wider than that accrued over the first ten months of 2013.

Icelandic producer price inflation decelerated to 6.1% in November from 6.5% in October.

Japanese supermarket sales recorded a smaller on-year decline of 0.7% in November versus a drop of 1.9% in October.

Consumer sentiment in New Zealand sank 1.6% to a seven-quarter low in the final period of calendar 2014.

The U.S. reports existing home sales and the Chicago Fed National Activity Index today.  Tomorrow will be a busier day from a data release standpoint with scheduled arrivals of U.S. revised GDP plus monthly personal income and spending, new home sales, the FHFA home price index and the U. Michigan consumer confidence index.

Tuesday will also be a busier day Tuesday in Europe and Asia, except for Japan which is closed then for the Emperor’s Birthday.  Late this week when most other markets are closed for the Christmas break, Japan reports its deluge of monthly statistics.

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

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