Continuing Impasse on Greece and Oil Back Under $50/Barrel

February 11, 2015

Ahead of today’s meeting of eurozone finance ministers, Greece and its creditors appear even further apart on solving the debt problem.  Greek debt amounts to 175% of GDP, and the Tsipras Government, which seeks to renegotiate the terms of its loans, won a parliamentary vote of confidence by 162-137 supporting the new leadership’s approach.  German Finance Minister Schauble called the Greek suggestion a non-starter.

Greek share prices are down 3.3% on the day currently, and the 10-year Greek bond yield is 12 basis points higher and marginally above 10.0%.  In other European bourses, share prices have lost 0.8% in Spain, 0.5% in Switzerland and France, and 0.3% in Germany and Britain. 

In markets around the Pacific Rim, stocks fell 0.9% in Hong Kong but rose 0.8% in China, 0.6% in India, and 0.7% in Taiwan.  Japan’s Nikkei declined 0.3%, and the Aussie market slipped 0.5%.

Ten-year sovereign debt yields slid a basis point in Germany and the U.K. while remaining unchanged in Japan.

West Texas Intermediate oil declined 0.7% to $49.68 per barrel, while Comex gold edged up 0.1% to $1,233.90 per ounce.

A statement from Group of Twenty finance ministers and central bank heads, who met for two days in Istambul, warned of excessively low inflation and weak aggregate demand and recommended continuing pro-growth macroeconomic policies in most advanced economies.

The credit rating agency Moody’s released a report predicting that lower oil prices would strengthen U.S. but not global growth this year and next.

The People’s Bank of China’s fourth-quarter Monetary Policy Report made no concession to the recent spate of softer-than-expected data.  Policy modifications will be done prudently and at the margin.  Chinese growth could dip under 7.0%.

The Westpac measure of Australian consumer confidence jumped 8% this month, most in three years.  Australian home lending increased 2.7% in December, most since August 2013.

Home price inflation in New Zealand rose to 7.5% on year despite a 1.0% monthly decline in January.

Norwegian growth accelerated last quarter and surpassed expectations.  Mainland GDP and total GDP respectively went up by 0.5% and 0.9% relative to 3Q.

The French current account deficit swung to a EUR 1.9 billion in December after a 0.3 billion euro surplus in November.

Turkey’s current account deficit of $45.8 billion last year was 29% smaller than in 2013.

South Korean unemployment unexpectedly dipped 0.1 of a percentage point to 3.4% in January. 

Swedish unemployment stayed at 4.1% seasonally adjusted in January despite ticking up to an 11-month high of 4.4% not adjusted.

Hungarian consumer prices slid 0.2% last month and registered a 12-month 1.4% rate of decline, led by lower transportation costs.

Brazilian retail sales sank 2.6% on month in December, cutting the on-year rise to merely 0.3%.

The U.S. monthly federal budget figures gets reported later, as well as weekly oil inventories.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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