Difficult Talks with Greece as Time Begins to Run Out

April 24, 2015

The spotlight today is on a meeting of eurozone finance ministers, trying to secure a debt agreement with Greece.  The tentative deal back in February was contingent upon Greece undertaking reforms but the end of April.  Well here we are, with scant reforms, and Greek officials wanting aid first and then reforms to follow, but the other finance ministers insisting on no further slippage in the timetable for reform.

The dollar is down from Thursday closing levels by 0.7% against sterling, 0.3% versus the euro, Australian dollar and loonie, 0.2% relative to the yen and 0.1% vis-a-vis the Swiss franc.  The dollar is steady against the yuan and has edged 0.1% higher versus the kiwi.

Share prices in the Pacific Rim were mixed Friday, falling by 1.1% in India, 0.8% in Japan and China, and 0.6% in South Korea but climbing 1.2% in Taiwan, 1.5% in Australia, 0.8% in Hong Kong and 0.3% in Singapore.

European equities have risen 1.4% in Greece, 1.3% in Italy, 0.6% in Germany, 0.9% in Spain, 0.4% in the U.K. and 0.3% in France.  The Swiss market, in contrast, has slipped 0.3%.

WTI oil and Comex gold have slipped by 0.5% to $57.46 per barrel and 0.3% to $1,190.60 per ounce.

Ten-year German bund and Japanese JGB yields are a basis point softer at 0.15% and 0.28%, while the 10-year British gilt edged a basis point higher to 1.70%.

IFO Institute data on Germany in April were mixed.  The overall business climate index rose 0.7 points to a reading of 108.6, best since Mid-2014 but only because of a 1.8-point improvement in the current situation.  Expectations fell 0.4 points, and the retail sector reading was halved to 2.6.  IFO officials summed up the report with the assessment that the “upswing in the German economy continues.”  However, a second IFO survey, which focuses on the climate in the services sector slipped 0.6 points to a five-month low of 22.7.

Japan’s all industry index rose just 0.1% in February but nonetheless beat forecasts for a decline.  The index, a monthly supply-side proxy for GDP, was 0.8% higher in 1Q than its average 4Q14 level but still posted a 1.2% on-year drop in the latest reported month. 

Corporate service prices in Japan climbed 0.5% in March, the strongest month-on-month advance since last April when the sales tax increase.  The year-over-year increase in the CSP slid 0.1 of a percentage point to 3.2%, lowest since March 2014.

Industrial production in Singapore recorded a larger 12-month decline in March of 5.5% than the 3.3% February-on-February decrease.  Consumer confidence in South Korea improved to a reading of 104 this month from 101 in March.  Malaysian unemployment of 3.2% in February was 0.2 percentage points above January.

Dutch business sentiment strengthened to a 4-month high of 3.3 in April from 1.4 in March.  Producer prices in Finland, which have posted negative on-year changes for the past eight months, were 0.8% lower in March than a year earlier compared to a 1.8% drop in February.  Spanish producer prices fell 1.2% on year in March, their ninth such decline in a row, albeit smaller than the 1.6% drop in January.  Belgium’s business climate was little changed in April from the reading in March.  Austrian industrial output fell 0.8% on month and 0.2% on year in February.  Czech economic sentiment remained unchanged in April, as consumer confidence fell to a 5-month low but business sentiment strengthened.

U.S. durable goods orders easily topped expectations in March, rebounding 4.0% from a February drop of 1.4%.  The jump reflected non-defense aircraft, up 30.6% on month, without which durables actually eased by 0.5%.  Durables excluding non-defense and aircraft declined in each month of the first quarter and recorded a 1.8% drop between 1Q14 and 1Q15.

Mexican retail sales rose 0.5% in February and by a bigger 5.6% on year.

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

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