2010/08/16 20:06DJ Moody's: Worst Days 'Probably Past' For Ireland, Irish Banks
LONDON -The European Central Bank's purchases of short-dated Irish government bonds last week doesn't signify that the recent calm in European bond markets was only temporary, Moody's Investors Service said Monday, adding that 'the worst days' for Ireland and its banks are 'probably' past. The ECB's purchases were a bid to calm rising market volatility stemming from concerns about the credit-worthiness of Irish banks. 'We are quite confident that the ECB's programme to provide liquidity to the European sovereign and bank securities market is winding down, and that the latest intervention is an aberration in an established trend,' Moody's said. But there are 'no quick fixes to restoring the financial strength of the Irish banking sector' and 'ECB intervention should help maintain a more manageable cost of funds' for Irish banks. 'Fresh volatility, if sustained, would be credit negative' for Irish banks, Moody's said in its Weekly Credit Outlook.
2010/08/16 20:06DJ Fed Call:No Liquidity Operation Due; Fed Funds At 0.2100%
NEW YORK -The Federal Reserve has no liquidity operations scheduled for Monday. Fed funds were last quoted at 0.2100%, compared to the federal-fund target range of 0 to 0.25%, according to Tullett Prebon data.
2010/08/16 18:36*DJ 3-Month Euro Libor Unchanged At 0.83188% Vs Friday
2010/08/16 18:36*DJ 3-Month Sterling Libor Falls To 0.73% Vs 0.73163% Friday
2010/08/16 18:33*DJ 3-Month USD Libor Falls To 0.36188% Vs 0.36938% Friday
2010/08/16 18:28=DJ WORLD FOREX: Euro Gains A Little; Sentiment Mixed
LONDON -Weak Japanese growth data raised fears about the global recovery and helped support safe haven currencies, such as the dollar and the yen, Monday. However, the risk of more verbal or actual market intervention from the Bank of Japan ensured that gains were limited and most major currencies were showing little significant direction. The euro started the day weak but then bounced off support at $1.2730. The single currency's rebound coincided with a slightly better tone among European stock markets, but even those gains were soon turned into small losses as European trading got underway. News that second quarter growth in Japan of an annualized 0.4%, instead of the 2.3% that had been expected, sent global sentiment diving. As investors headed back into safe havens, the dollar was a main beneficiary but the yen was even stronger with the dollar falling at one stage to Y85.70. See the dollar's rise and fall against the yen: http://www.dowjoneswebservices.com/chart/view/4427 However, yen strength was limited as the market continues to fear Bank of Japan intervention, in one form or another, to stop the yen rising. Japanese Prime Minister Naoto Kan is still expected to hold talks with Bank of Japan Governor Masaaki Shirakawa some time soon but an expected meeting earlier Monday failed to materialize. While Bank of Japan officials could continue with just verbal intervention, there is the risk the central bank either wades into the market selling the yen or announces further monetary easing in an attempt to undermine support for the currency. The euro also faced a highly volatile start to the week. The Japanese GDP data initially sent it tumbling down to support at $1.2730 but it bounced off that level, gaining more than once cent to $1.2837. However, much of these gains were lost quickly as the market looks ahead to the next bond auctions for Ireland and Portugal, scheduled for Tuesday and Wednesday respectively. Although Germany is also expected to release a strong ZEW survey on Wednesday, showing a further recover in business sentiment, its impact on the euro could be small. 'Evidence that current sentiment is holding up well in Germany will not placate a market which sees the vulnerabilities as lying elsewhere in the euro zone,' said Daragh Maher, deputy head of global foreign exchange at Credit Agricole in London. Maher was referring to the continued funding problems being faced by peripheral euro zone debtors. The pound, meanwhile, found itself under more selling pressure after Rightmove reported that house prices fell by 1.7% over the course of this month. By midmorning, the pound had fallen back to $1.5561 from $1.5601 late Friday in New York, according to EBS. The dollar fell to Y85.86 from Y86.28 while the euro rose to $1.2796 from $1.2757. The single currency also fell to Y109.85 from Y110.21 while the dollar fell to CHF1.0417 from CHF1.0516.
2010/08/16 17:26=DJ DATA SNAP: Euro-Zone Inflation Accelerates On Energy Prices
LONDON -Euro-zone inflation accelerated in line with expectations in July due to higher energy prices, but remained below the European Central Bank's target level, official data showed Monday. The euro zone's annual inflation rate rose to 1.7% in July from 1.4% in June, the European Union's Eurostat statistics agency said. On a monthly basis, consumer prices fell 0.3% in July, after rising 0.1% in June. The final figures confirmed the preliminary estimate of annual inflation and were also in line with the market consensus forecast from a Dow Jones Newswires survey of economists last week. The breakdown of the data showed annual energy-price inflation increased to 8.1% in July from 6.2% the previous month. Germany, France and Italy, the three biggest economies in the euro zone, all saw their annual inflation rates increase in July after dipping the previous month. The ECB defines price stability as inflation of close to but just below 2%. The central bank has kept its benchmark interest rate at a record low of 1.0% since May last year. Eurostat website: www.ec.europa.eu/eurostat
2010/08/16 17:02*DJ Euro-Zone Jul Core CPI -0.5% On Mo; +1.0% On Yr
2010/08/16 17:02*DJ Euro-Zone Jul CPI Ex-Tobacco -0.3% On Mo; +1.7% On Yr
2010/08/16 17:00*DJ Euro-Zone Jul CPI -0.3% On Mo; +1.7% On Yr
2010/08/16 17:00*DJ Euro-Zone Jul CPI Revised From +1.7% Flash Est.
2010/08/16 17:00*DJ Euro-Zone Jul CPI Forecast -0.4% On Mo; +1.7% On Yr
2010/08/16 16:06DJ ECB's Stark: Fiscal Reforms Raise Growth Outlook - FT
FRANKFURT -The budgetary reforms being undertaken by countries in the euro zone will help it to grow faster in the medium term, European Central Bank executive board member Juergen Stark wrote in an article published in the Financial Times Monday. Stark said financial markets haven't understood the nature of the reforms that countries started after the financial crisis spread to their debt markets this spring. 'The notion of a 'European dilemma' confuses fiscal restraint with fiscal reform,' Stark wrote. 'What is critical is that the fiscal policy correction not be an isolated act but rather a fundamental change in the underlying fiscal policy strategy--the policy strategy for realising primary surpluses now and in the future.' Stark's comments are the latest from a top ECB official to express frustration with the lack of recognition from financial markets for the euro zone's response to its debt troubles. Irish Central Bank Governor Patrick Honohan last week described the yield premia demanded of Ireland by the bond market as 'ridiculous'. The bond market has remained skeptical of the ability of weaker euro-zone countries to grow their way out of the debt problems they have amassed. It also frets that austerity packages implemented by countries like Greece and Spain may tip them back into recession and deflation. Stark argued, however, that 'the necessary adjustments that are being made are structural in character. Tax systems are being adjusted, and the structure and level of expenditure is being made more conducive to growth.' Newspaper website: www.ft.com
2010/08/16 16:06*DJ 10-Year Bund Futures Contract Hits New Record High Of 131.55
2010/08/16 15:55DJ Tokyo Shares End Lower As Exporters Fall On Weak GDP Data -2-
TOKYO -Tokyo stocks fell Monday as weaker-than-expected Japanese gross domestic product data triggered selling in exporter shares such as Sony and TDK on worries that growth is slackening. Market observers say tension from possibly more yen strengthening may continue to weigh on stocks. Alternatively, however, they note that hopes for Bank of Japan action to address the strong yen will forestall heavy selling. The country's real GDP expanded 0.4% in annualized terms during the second quarter, much lower than the 2.3% growth expected by economists, the Cabinet Office announced before the opening bell. 'If the central bank does nothing, it may be interpreted negatively by currency markets (and therefore negatively for stocks),' said Tsuyoshi Kawata, senior strategist at Nikko Cordial Securities. The Nikkei 225 Stock Average fell 56.79 points, or 0.6%, to 9196.67. The Topix index of all the Tokyo Stock Exchange First Section issues also fell 2.61 points, or 0.3%, to 828.63, with 22 of 33 Topix subindexes ending in negative territory. Kawata said that the Nikkei is expected to be supported at 9100 for the time being, but that if the BOJ does not take any action at its September policy board meeting, the dollar may fall closer to Y80, which may drag the index down to 8500. Meanwhile, local media reported that Prime Minister Naoto Kan and BOJ Gov. Masaaki Shirakawa may meet this week to exchange views on the yen's recent appreciation and ways to address it. Technology exporter shares sharply underperformed the broader market, with Sony falling 3.0% to Y2,535, TDK dropping 3.1% to Y4,550, and Advantest shedding 2.2% to Y1,724 as the dollar traded below Y86. Friday's weak Nasdaq performance was also seen as a sector inhibitor. Traditional non-tech heavy exporters also fell, with Honda Motor sliding 0.9% to Y2,765 and Nissan Motor falling 0.8% to Y641. Share movers not attributed directly to currency markets included Marubeni, which fell 2.4% to Y454 after UBS cut it to Neutral, citing its heavy capital investments amid weak stock market conditions. On the other hand, real estate stocks rallied, with Mitsui Fudosan rising 1.9% to Y1,347 and Mitsubishi Estate gaining 2.5% to Y1,251 after July sales of new condominiums rose 28% on-year. Real estate shares have benefited from relatively stability as the sector has not been affected by the stronger yen woes that have impacted exporters, according to Yutaka Yoshii, general manager at Mito Securities. In the same sector, Leopalace21 jumped 14% to Y140 after the Nikkei reported on Saturday that its housing construction business is expanding and that it aims to win Y14 billion worth of orders for 35 nursing homes by March 2011. Asahi Breweries also bucked the broader market's overall weakness, rising 2.4% to Y1,604 on brisk volume as its China affiliate Tsingtao Brewery posted a 30% growth in net profit on-year for the first half, logging some CNY830 million. September Nikkei 225 futures closed down 90 points, or 1.0%, at 9180 on the Osaka Securities Exchange.
2010/08/16 15:02DJ Forex Options: Dollar/Yen Options Rise; Stock, FX Moves Eyed
TOKYO -Dollar/yen currency options rose in Asia Monday as demand for downside protection against the U.S. unit strengthened amid a weak spot market.The dollar fell as low as Y85.70 after Japan's economy minister Satoshi Arai said he hadn't heard if Prime Minister Naoto Kan plans to meet with Bank of Japan Governor Masaaki Shirakawa anytime soon.The remarks cooled speculation about the possibility of monetary easing and currency intervention in the near term. A local media report last week fueled views that the top officials would meet to exchange views on the yen's recent appreciation and ways to deal with it.Benchmark one-month at-the-money dollar-yen volatilities rose 11.15%/11.85% Monday, up from 10.95%/11.65% in New York Friday.At 0415 GMT, the U.S. unit was at Y85.83, compared with Y86.28 in New York Friday.Implied volatilities could gain about 10 percentage points if the Tokyo share market extends its falls, and if the dollar declines below Y85.50, said an options dealer at a major Japanese bank.Tokyo dealers said market participants will continue to pay close attention to moves by Japanese government officials and the Bank of Japan.
2010/08/16 14:49DJ PRECIOUS METALS: Gold Up In Asia On Soft Japan GDP Data
SINGAPORE -Gold moved higher in Asia Monday as weak Japan GDP growth data encouraged safe haven bids.'It seems that the sentiment among investors is deteriorating and that could prove beneficial to gold prices,' Phillip Futures said in a note.Japan's GDP increased 0.4% in annualized terms in the second quarter of 2010, much lower than a revised 4.4% rise in the January-March quarter and worse than the 2.3% growth tipped in a poll of 16 economists by Dow Jones Newswires.That news, and supportive background factors such as a stronger euro against the dollar, sent gold to its highest level since July 1.At 0615 GMT spot gold was at $1,219.20 a troy ounce, up $3.80 since Friday's New York close, with Tocom June 2011 gold at Y3,376 a gram, down Y2.Technically, gold needs to break $1,224/oz, a 61.8% Fibonacci retracement of the $1,265 to $1,157 down move, in order to keep the rally going, ScotiaMocatta said.Other precious metals were also higher, helped by gains in industrial metals; spot silver was at $18.21/oz, up 7 cents.Spot platinum was at $1,529/oz, up $8, while palladium was steady at $476/oz.ABN Amro said platinum group metals were unlikely to rally much more in the short term.'The slight slowdown in growth of Chinese car sales and sluggish auto sales in the U.S. and European markets is likely to prevent PGM prices from reaching April's levels anytime soon,' it said.Platinum hit a 2010 high of $1,753/oz on April 30.
2010/08/16 14:45=DJ WORLD FOREX: Yen Up On Risk Aversion After Weak Japan GDP -3-
TOKYO -The yen rose against the dollar in Asia Monday as heightened risk aversion pushed up demand for the safe-haven currency after weaker than expected Japanese gross domestic product data. Weak economic data are usually positive for the yen as they tend to push down Tokyo shares and cause investors to shun riskier assets, dealers said. The country's real GDP expanded 0.4% in annualized terms during the second quarter, much lower than the 2.3% growth expected by economists, the Cabinet Office said earlier in the day. The Nikkei Stock Average, Japan's benchmark share index, briefly fell below 9,100 following the data release. Shinkin Asset Management's senior dealer Jun Kato said it's only a matter of time before the index falls below the psychologically important 9,000 mark. If it breaks below that level, investors will resume 'fierce yen-buying,' Kato noted. As of 0450 GMT, the dollar was at Y85.83 from Y86.28 in New York Friday. Investors said there are automated stop-loss selling orders at Y85.50, and if they are executed, the U.S. unit may fall below Y85.00. Japanese exporters were also active dollar-sellers, they noted. 'Investor sentiment isn't good because of the recent weak economic data coming out of industrialized nations,' Shinkin's Kato said. Dealers said the Japanese currency also rose because of the view that Tokyo may not take any immediate action to curb the yen's rise. Fears that the government and the Bank of Japan may flesh out yen-negative steps as early as Monday surfaced after media reports Friday aid that Prime Minister Naoto Kan and BOJ Gov. Masaaki Shirakawa will meet to discuss ways to cope with recent moves in the currency market. But such speculation has eased for now because National Policy Minister Satoshi Arai said earlier in the day that he hasn't heard if Kan and Shirakawa will meet anytime soon, adding he thinks policy-makers should spend more time analyzing whether the recent moves in the yen 'could become a major obstacle' to Japan's economic recovery. In any case, yen-selling intervention looks unlikely at the moment because current market moves are 'not disorderly,' said Yoichi Ito, a senior analyst at the STB Research Institute, referring to wild swings in foreign exchange rates. Excessive currency moves have long been an excuse for industrialized nations to step into the market. Looking ahead, investors will focus on U.S. economic data such as a housing report on Tuesday, and if they log weak figures, investors will try to push the greenback down against its Japanese counterpart, said Nomura Securities senior dealer Hiroshi Maeba. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 82.713 from 82.801. The euro, meanwhile, was at $1.2792 and Y109.81 from $1.2757 and Y110.21 in New York last week. Dealers said the euro may rise against the dollar due to expected declines in the U.S. Treasury yields but may fall versus the yen because of the risk-aversion sentiment.
2010/08/16 13:08=DJ FED WATCH: Hoenig Uncorks Broadside Against FOMC Policy Stance
NEW YORK -It's been a matter of record for most of this year that Thomas Hoenig, chief of the Kansas City Fed, has disagreed with Chairman Ben Bernanke and the rest of the members of the Federal Open Market Committee on monetary policy.As the FOMC has moved even farther away from the policies the veteran central banker deems prudent, Hoenig has become increasingly vocal about the risks he sees in keeping interest rates near zero. He has even advocated rate increases, and he has done it at a time when many, including those at the central bank, are looking at new ways the Fed could help spur growth.This divergence has left Hoenig with little apparent influence over the policy debate. He got even farther away from his colleagues when they decided this week to provide new stimulus, of a sort, by reinvesting the proceeds of its mortgage holdings in Treasury securities.Hoenig made it clear Friday how much he disagreed with the Fed's current direction in a speech that surprised some economists, given the breadth of the critique. In addition to fretting about interest-rate policy, Hoenig also questioned the process and the motivation for setting policy, while chiding market participants for their reliance on cheap central-bank funding.Speaking in Lincoln, Neb., the official hinted at his discomfort about a past practice that in his view may have re-emerged this week.Ahead of some FOMC gatherings in years past, stories would appear in major newspapers that laid out in varying levels of detail what policy makers would do at future meetings. Some central bankers bristled at the practice, feeling the newspaper accounts essentially committed the FOMC to follow a pre-ordained path, diminishing the value or even negating the input of the committee members.Hoenig appeared to suggest that this process may have re-appeared.'Before this week's FOMC meeting, The Wall Street Journal wrote that the Fed would add more stimulus into the economy--including the purchase of long-term treasuries. It turns out that reporter was remarkably prescient,' Hoenig said. Reading between the lines, it looks as if Hoenig believes the FOMC decision was essentially settled before the meeting even began.Hoenig also warned against the notion that Fed's action on Tuesday may have been done largely to satisfy financial markets. The anxiety about current conditions had led many traders to expect action.'Market participants should not direct policy,' Hoenig said. 'When mixed data are reported as systematically negative results, and the more positive, long-term growth trends fail to be adequately acknowledged, it is an invitation to hasty actions,' he said.The official even questioned the market's motives for wanting the current stance of policy to continue.'Of course the market wants zero rates to continue indefinitely: They are earning a guaranteed return on free money from the Fed by lending it back to the government through securities purchases.'For some Fed watchers, the totality of what Hoenig had to say was almost shocking for an organization that works by consensus.'I have never, in nearly 20 years of watching the Fed, seen a speech quite like this from a member of the FOMC,' said Stephen Stanley, chief economist at Pierpont Securities. 'Within the constraints of how Federal Reserve officials operate, I would call this a scathing critique of monetary policy now and over the last 10 years.
2010/08/16 10:09=DJ FOREX VIEW: As Yen Rallies, Bank Of Japan Mulls Next Move
TORONTO -Japan's top finance official has pledged to take 'appropriate action' to temper the yen's ascent, a clear indication the Japanese government is not at all happy about its currency's recent surge to a 15-year peak against the dollar.But that begs the question: What action is appropriate for the Ministry of Finance and Bank of Japan to take under current circumstances?Finance Minister Yoshihiko Noda has said that the government 'will take appropriate action while closely monitoring economic developments.' In the past, Japanese officials have often used the term, 'appropriate action' as an indirect reference to currency market intervention.But many analysts consider the prospects of intervention through official buying and selling of currencies to be doubtful and ill-advised. The BOJ hasn't been in markets since March 2004, and there hasn't been a concerted central bank intervention involving the BOJ, Federal Reserve and European Central Bank in nearly a decade.'When they were intervening in late 2003 and 2004, it didn't really work,' said Marc Chandler, global head of foreign exchange at Brown Brothers Harriman in New York. 'I would say that the only thing worse than no intervention is failed intervention.'But with the U.S. dollar dipping this week to levels under Y85 not seen since July 1995, the focus has turned to the key level of Y79.75, the dollar's all-time low. Some type of official action that goes beyond mere talk is believed to be likely in Japan if the greenback treads into the low Y80s.It would take 'bold measures' to exert impact on the foreign exchange market, Bank of America Merrill Lynch said this week in a research note. Aside from intervention, monetary easing and an emergency statement from the Group of Seven leading economies on shared concerns about excessive yen volatility are considered possible.The Bank of Japan can attempt to 'talk down the yen,' said Chris Ragan, an associate professor of economics at McGill University in Montreal.The problem is that threatening to do something and then not doing it 'makes the talk cheap,' said Ragan, who served as a special advisor to the governor of the Bank of Canada in 2004-2005.'In the deepest sense, exchange rates are driven by demand. The yen is strengthening for real, genuine reasons. It's very difficult to stand in the way of that,' Ragan said.But Japanese finance officials do have other options, mostly in the form of monetary easing. Brown Brothers Harriman's Chandler suggests the possibility of raising capital controls and increasing the use of Samurai bond issues.Earlier this year, the Japan Bank for International Cooperation began to insure foreign countries' yen-denominated bond issues. When a country issues the so-called Samurai bonds and JBIC insures the bonds, it results in a sale of yen to buy the bonds.Japan could step up programs to lend directly to people, as the Federal Reserve did in the Great Depression. Or impose a negative interest rate, as Germany and Switzerland did in the 1970s, discouraging people from holding onto the currency.'The market often times does not appreciate that politicians and government bureaucrats can be creative, and could surprise us,' Chandler said.This time round, as Japan battles yet again to stem yen appreciation, the only test of the appropriate course of action may be the one that works and not necessarily a repeat of tactics used in the past.
2010/08/16 10:08DJ Japan Economy Minister: No Need To Compile Stimulus Measures Right Away
TOKYO -Japan's economy minister said Monday it is too early to introduce new stimulus measures despite signs of deceleration in the nation's economy.'We don't need to move immediately based on the current situation,' Satoshi Arai, who is also minister for national policy, said at a news conference.He added that the government needs to examine revised second-quarter gross domestic product data due September to see whether it needs to implement new steps to bolster the economy.Data released earlier Monday showed Japan's real gross domestic product increased 0.4% in annualized terms in the April-June period, the slowest pace in three quarters.Arai said that while the government and the Bank of Japan must keep working together to curb the yen's recent strength, policy-makers need to spend a bit more time analyzing whether the strong currency 'could become a major obstacle' to the nation's economic recovery.He also said he hasn't heard if Prime Minister Naoto Kan plans to meet with BOJ Gov. Masaaki Shirakawa anytime soon.
2010/08/16 08:46=DJ FOREX WEEK AHEAD: Dollar Headed Higher On Recovery Worries
NEW YORK -A shift in worries about economic growth is injecting new life into the dollar, with the U.S. no longer seeming such a laggard compared with Asia and the euro zone.Mounting concern over the pace of the global recovery has robbed the euro and other higher-yielding currencies of their forward momentum, with the dollar and yen benefiting as investors seek safety rather than risk. The common currency slumped to a three-week low at $1.2757 Friday in New York, down from three-month highs a week earlier at $1.3334, sinking on the realization that recent economic data from Europe and Asia haven't been much better than figures coming from the U.S.The uneven rate of growth in the euro zone has brought back concerns about the ability of some members to balance their debt obligations with the need to stimulate their economies. Nervous investors have been shifting positions toward the traditional currency havens, the dollar and yen.While the euro is poised to extend its losses below $1.28, attention will focus on the Bank of Japan, with the dollar stubbornly clinging near 15-year lows versus the yen. The determination of Japanese officials to stem the yen's appreciation and keep exports competitive is expected to work in the U.S. currency's favor.Market participants will be watching for a meeting between Japanese Prime Minister Naoto Kan and Bank of Japan Gov. Masaaki Shirakawa to discuss the yen's recent climb. Japanese daily Asahi Shimbun reported Friday that such a meeting may take place in the coming week.The yen recently reached its strongest level against the dollar since July 1995, sparking worries that a strong domestic currency could take more steam out of the country's already-decelerating export-led growth.Worried that the yen is appreciating too far, too fast, Japan has been intimating that it is considering intervention in some form. The Bank of Japan checked exchange rates Thursday during Tokyo hours, a type of verbal intervention that involves asking commercial banks for details of their currency transactions.Ron Leven, currency strategist at Morgan Stanley in New York, said quantitative easing, possibly in the form of increasing its money market operations, is the most likely first step forward for the Bank of Japan."There is a lot of speculation about where they are going to draw the line in the sand, because I can guarantee you the Japanese government and Japanese exporters are not happy with these levels," said Firas Askari, head of foreign-exchange trading at BMO Capital Markets in Toronto.The euro's direction next week could be influenced in large part Tuesday, with the release of Germany's ZEW business-sentiment survey. Economists expect the index to stabilize after three months of decline, as confidence rebounds following strong manufacturing orders."A disappointing number there, together with the sovereign-debt worries, could make life very difficult for the euro next week," said Leven at Morgan Stanley.The Greek economy contracted sharply in the second quarter as austerity measures battered into incomes, according to data released Thursday. The figures reinforced concerns about the impact on growth of the austerity measures put in place to improve the fiscal accounts in some of the peripheral euro-zone nations."Meeting the fiscal targets that were agreed to under the [debt-rescue] program is going to be very painful and difficult," Leven said. "As unemployment starts going up and things do really start getting worse, there is risk that the will to keep doing this is going to fade."Debt spreads, meanwhile, have continued to widen between euro-zone stalwart Germany and peripheral members such as Ireland.Late Friday, the euro was at $1.2781, from $1.2833 late Thursday, according to EBS via CQG. The dollar was at Y86.23, from Y85.90.Traders expect the euro to trade between $1.2500 and $1.2900 in the near term, and for the dollar to travel between the key level of Y85.00 and Y89.00.Elsewhere, minutes from the Reserve Bank of Australia will be parsed for indications that the economy there may be rolling over. And the U.K. consumer price index will be closely watched, with inflation there becoming a source of concern.
2010/08/16 08:26=DJ Japan GDP Growth Slows As Consumption, Export Gains Slacken
TOKYO -Japan's economic recovery slowed in the second quarter of 2010 as growth in consumption and exports slackened, adding to concerns over an economy already hobbled by deflation and a soaring yen. Real gross domestic product increased 0.4% in annualized terms in the April-June period, the slowest pace in three quarters and down from a revised 4.4% rise in the January-March quarter. The result was much worse than the median forecast for 2.3% growth in a poll of 16 economists by Dow Jones Newswires. GDP grew 0.1% compared to the previous quarter, when it rose a revised 1.1% on quarter. Private consumer spending, which accounts for nearly 60% of Japan's GDP, was flat in the April-June period, compared with a revised 0.5% growth in the previous quarter. A recovery in wages, as summer bonuses rose after sharp cuts last year, kept spending from slowing further. But the low levels persisted in part as a weak jobs market weighed on consumer sentiment. In June, the unemployment rate hit a seven-month high at 5.3%. Deflation also continued to drag on economic growth. The GDP deflator, the broadest measure of price trends, was minus 1.8 during the April-June quarter. The result represents a mild improvement from the minus 2.8% in the previous quarter, as price falls have eased slightly. But it still underscores how deeply entrenched deflation is in Japan, and could prompt the government to put more pressure on the Bank of Japan to take additional easing measures. Corporate capital investment rose by 0.5% in the April-June period, following a 0.6% rise in the previous quarter. While the result marked the third straight quarter of gains, economists say recent weakness in leading indicators of spending suggest business spending, which accounts for 16% of GDP, may moderate for the rest of the year. Domestic demand subtracted 0.2 percentage point to GDP growth, compared to the 0.5 it added in the previous quarter. The contribution to GDP from external demand, or exports minus imports, was at 0.3 point in April-June from a revised 0.6 in the previous quarter. 'On a monthly basis, export volumes have already peaked in May and turned downward for a wide range of Japan's trade partners,' said Junko Nishioka, chief economist at RBS Securities Japan. 'In particular, exports to Asia are clearly decreasing from May onwards.' The slowing of Japan's growth could add to concerns over the global economy. The world's other economic power-houses have recently seen momentum fade. The U.S. economy grew at an annualized 2.4% in April-June, down from 3.7% in the previous quarter. China's growth, though still strong, slipped to a 10.3% on-year expansion in April-June from 11.9% in the previous quarter. While data Friday showed GDP in the European Union expanded 1.7% on year in the second quarter from 0.6% in the previous quarter, economists say the current pace of growth is unlikely to last. Further clouding the outlook for Japanese exports is the recent strengthening of the yen. The dollar fell last week to Y84.72, its lowest since July 1995. A strong yen makes Japanese products more expensive overseas and eats into revenue sent back to Japan.
2010/08/16 08:19*DJ 10-Year JGB Yield Falls To Fresh 7-Year Low At 0.955%
2010/08/16 08:15*DJ Australian Dollar Falls Below US$0.8900 After Weak Japan GDP Data
2010/08/16 08:02*DJ Lead September JGB Futures Open Up At 142.55 Vs 142.39 Friday
2010/08/16 07:58*DJ Japan Govt: April-June GDP $1.288T
2010/08/16 07:57*DJ Japan Govt: 2Q GDP Below China 2Q GDP
2010/08/16 07:53*DJ Japan GDP: Private Inventories -0.2 Pct Pts To Growth
2010/08/16 07:53*DJ Japan GDP: Public Fixed Investment -3.4% Q/Q
2010/08/16 07:52*DJ Japan GDP: External Demand +0.3 Pct Pts To Growth
2010/08/16 07:52*DJ Japan GDP: Apr-Jun Deflator At -1.8% Vs -2.8% In Jan-Mar
2010/08/16 07:52*DJ Japan GDP: Domestic Demand -0.2 Pct Pts To Growth
2010/08/16 07:52*DJ Japan GDP: Private Consumption Unch Q/Q
2010/08/16 07:51*DJ Japan Apr-Jun Nominal GDP Annualized -3.7%
2010/08/16 07:51*DJ Japan GDP: Private Capital Outlays +0.5% Q/Q
2010/08/16 07:51*DJ Japan Apr-Jun Real GDP Annualized +0.4%
2010/08/16 07:51*DJ Japan Apr-Jun Nominal GDP -0.9% Q/Q
