St George Economics economy and finance update
Another night of limited economic news saw a further session of flat markets. The market may have been waiting for US Fed Chairman Bernanke's speech on monetary policy later this morning.
The FTSE100 fell 0.2% and the Dax was up 0.2% while in the US the Dow rose 0.2% and the S&P500 fell 0.2%.
Bond markets were similarly lacklustre. US ten year bond yields fell just one basis point to 1.87% while German long bond yields fell three basis points to 1.55% on soft economic data (see below).
The AUD moved a touch higher overnight as the USD also slipped lower against the euro. Comments by a US Fed member that quantitative easing (QE) may go on for longer than some have recently suggested appeared to add to USD weakness.
The thought of extended US QE pushed gold a few dollars higher and oil lifted marginally on the softer USD.
Housing finance figures were soft with a 0.5% decline in the number of home loans in November. Excluding refinancing, the number of loans fell 1.3%.
On a brighter note, the value of loans made rose 0.6%, a fourth consecutive month of increases. The ANZ job ads series fell 3.8% in December, the ten consecutive month of decline.
The TD Securities - Melbourne Institute monthly inflation gauge rose 0.4% in December to be up 2.4% over the year.
Industrial production in the eurozone fell 0.3% in November following a 1.0% decline in October suggesting a contraction for Q4, 2012.
The ECB estimates that the Eurozone economy contracted 0.5% in 2012 and forecasts a further contraction of 0.3% in 2013.
A Bank of England financial policy committee has proposed that British banks offering large home loans that risk fuelling a future housing boom will have to hold extra capital to keep the financial system safe.
No data released, however, members of the US Federal Reserve were putting forward conflicting views on the longevity of the Fed's QE programme.
Moderate Lockhart said that QE4 is not without bound, while 'dove' Williams countered saying that any exit from the stimulus program is several years away given economic projections.
The market is waiting to see what Fed Chairman Bernanke believes.
Today's key data and events
- UK PPI Inputs Dec prev 0.1% (8:30pm)
- UK PPI Outputs Dec prev -0.2% (8.30pm)
- UK CPI Dec prev 0.2% (8.30pm)
- EZ Trade Balance Nov prev €7.9bn (9pm)
- US Empire Mfg Jan prev -8.1 (12.30am)
- US Retail Sales Dec prev 0.3% (12.30am)
- US Producer Prices Dec prev -0.8% (12.30am)
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