Saturday, 6 November 2010

BoJ holds, US employment rises

There was no additional monetary stimulus coming out of Friday's BoJ meeting. From AFP/CNA:

Japan's central bank on Friday kept its key rate unchanged at a rock-bottom zero to 0.1 per cent in a widely anticipated move, but refrained from announcing fresh monetary easing measures...

As part of previously announced monetary easing worth a total of 35 trillion yen (432 billion US dollars), the BoJ said it planned purchases of assets such as exchange-traded funds and real-estate investment trusts.

There was mixed news in the US, with employment rising in October. Bloomberg reports:

Employment in the U.S. rose in October for the first time in five months, a sign businesses may be starting to gain confidence in the prospects for a faster pace of growth.

Payrolls climbed 151,000, exceeding all estimates in a Bloomberg News survey of economists and following a revised 41,000 drop the prior month that was smaller than initially estimated, Labor Department figures showed today in Washington. Private payrolls expanded the most since April, while the jobless rate held at 9.6 percent.

However, pending home sales fell in September.

A report today from the National Association of Realtors showed that pending sales of existing homes unexpectedly declined in September, a sign the housing market at the center of the crisis remains a weak spot for the economy. The group’s index of pending home resales dropped 1.8 percent after a revised 4.4 percent gain the prior month.

Meanwhile, European economic news on Friday were quite negative.

The Wall Street Journal reports that eurozone retail sales fell in September.

Retail sales in the 16 countries that use the euro fell for the second straight month in September, indicating that weak consumer spending continues to be a drag on the currency area's economic recovery.

European Union statistics agency Eurostat said Friday sales volumes in the euro zone fell 0.2% from August, during which month they also fell 0.2%. Volumes were up 1.1% from September 2009, a slower annual rate of increase than the 1.3% recorded in August.

Even eurozone economic powerhouse Germany reported negative numbers on Friday. From Bloomberg:

German factory orders unexpectedly dropped in September, led by a slump in euro-area demand for investment goods, after big-ticket contracts inflated the previous month’s increase.

Orders, adjusted for seasonal swings and inflation, fell 4 percent from August, when they rose 3.5 percent, the Economy Ministry in Berlin said today. Economists had forecast a 0.4 percent gain, according to the median of 37 estimates in a Bloomberg news survey. From a year earlier, orders climbed 14 percent, when adjusted for working days.

And the eurozone still has to deal with simmering sovereign debt issues. From Bloomberg:

Ireland led a surge in the cost of insuring sovereign debt to a record as the government struggles to convince investors it can avert a European Union-led bailout.

Credit-default swaps on Ireland rose for a ninth day, soaring 18 basis points to 587, according to data provider CMA. The Markit iTraxx SovX Western Europe Index rose 6.5 basis points to a record 171.5...

Sentiment also weakened after a report showed Spanish growth stalled in the third quarter, as the deepest austerity measures in three decades undermined the economic recovery.

Credit swaps on Spain increased 18 basis points to 251.5, according to CMA. Contracts on Greece jumped 14.5 basis points to 866, Italy rose 10 to 192 and Portugal climbed 8 to 447.5. A basis point on a contract insuring $10 million of debt for five years is equivalent to $1,000 a year.

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