Holiday Conditions Continue

December 26, 2014

Many European markets stayed shut Friday for Boxing Day or St. Stephens Day.  Members of the Commonwealth are also closed.

The biggest share price movements were a 3.3% rebound in China’s market and a rise in Russia.  Japan’s Nikkei edged up 0.1% in spite of some disappointing data.  U.S. shares have risen in futures trading.

The Russian ruble settled back around 1%.  The dollar also advanced 0.6% against the Swiss franc, 0.4% relative to the euro and 0.1% vis-a-vis the yen but has lost 0.3% versus the kiwi and 0.1% against the loonie and sterling.  The yuan is steady, but there were press reports out of China that it could slide against the dollar next year if the latter continues to trend generally upward against major advanced country monies.

West Texas Intermediate oil is 0.9% stronger at $56.35 per barrel than its pre-Christmas close, aided by rebel fighting in Libya that has reduced that OPEC member’s production.  Comex gold climbed 1.9% to $1,196.30 per troy ounce.

The 10-year Japanese JGB yield bounced off its recent low to 0.32%.

The 12-month increase in Japanese consumer prices fell to 2.4% in November from 2.9% in October and 3.2% in September.  Analysts were not predicting a further decline.  Core inflation slowed to 2.7% and a mere 0.7% if one also excludes the effect of April’s sales tax hike to 8% from 3%. The seasonally adjusted CPI dipped 0.1% on month in December after dropping by 0.4% in November. 

Real household consumer spending in Japan rose 0.2% on month in November and posted a smaller 2.5% 12-month decline after a drop of 4% in October.  But total retail sales fell 0.3% on month and rose by a smaller-than-forecast 0.4% on year.  Real disposable incomes posted a 3.9% on-year slide.

Japanese labor cash earnings slumped 1.5% between November 2013 and November 2014, and a 4.3% plunge in real wages was the deepest on-year decline since 2009.

Japanese industrial production, which analysts thought would rise nearly 1%, instead fell 0.6% last month.  That took the year-over-year decline to 3.8% from 0.8% the month before.  The inventory-to-sales ratio went up another 4.0%, as inventories climbed 1.0% above October’s level while shipments fell 1.4%.  Compared to November 2013, the inventory ratio has jumped 12%.  Officials at the Ministry of Economics, Trade and Industry, who compile the data, predict a rise of only 0.4% in output for December but a 5.7% rebound at the start of 2015.

Japanese auto production recorded their fifth year-over-year decline in a row in November, and the 12.2% tumble was nearly twice as great as that of 6.3% in October.  In September, auto production had been down just 2.6% on year.

Japanese labor statistics were mixed.  Employment in November was unchanged from a year earlier, and the 3.5% jobless rate stayed at October’s level.  But the ratio of job seekers to offers of 1.12 last month surpassed expectations and October’s 1.10 ratio.

Japanese stock and bond transactions in the week of December 20 generated a net JPY 1.054 trillion net capital inflow, 14.6% more than in the prior week.

Singaporean industrial production fell 1.4% on month and 2.8% on year in November.  Street forecasts had anticipated a slight increase.

To support the ruble, Russia’s central bank spent nearly $16 billion in intervention last week, but reserves remain sizable at nearly $400 billion.

The week after Christmas historically sees more foreign exchange activity than the week before.  No U.S. data releases are planned today.

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



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