- price rises are a concern
- China will continue to improve its exchange rate mechanism
- will push forward interest rate reforms
As expected, Korean stocks little changed after the news;
December T-Bond futures a little lower
per Wall Street Journal
– Japan Tertiary Index Posts 1st M/M Drop In 4 Months
– Japan Tertiary Index Posts 6th Drop In Past 12 Months
– Japan Sep Tertiary Index +1.5% Y/Y Vs Aug Revised +2.5%
– Japan Tertiary Index Posts 8th Y/Y Rise In Row
– Japan Sep Tertiary Index M/M Drop Due to Slower Car Sales
TOKYO (MNI) – Japan’s tertiary industry index, which measures
spending in the services sector, fell 0.9% in September from the
previous month, posting the first m/m drop in four months and the sixth
in the past 12 months, the Ministry of Economy, Trade and Industry said
The figure came in weaker than the consensus call of a 0.5% fall.
The September decrease, led by slower motor vehicle sales, followed by a
revised 0.1% gain in August (initially -0.2% m/m).
Automobile sales slumped in the month as there had already been
rush purchases before the government ended its subsidy program for
buying energy-efficient vehicles in early September.
The seasonally adjusted index slipped to 97.9 in September from
98.8 in August.
The reading of 94.4 marked in March 2009, when the index slumped
3.4% m/m, remains the lowest level on record.
Historical data show that the index hit a record high of 103.5 in
August 2007, when it rose 0.9% from the previous month.
In July-September, the tertiary industry index rose 1.0% on
quarter, after showing a 0.1% fall in Q2 and a 1.1% gain in Q1.
From a year earlier, the unadjusted index rose 1.5% in September to
99.5, marking the eighth straight year-on-year rise after gaining a
revised 2.5% (preliminary +2.4%) in the previous month.
The 0.6% rise in February 2010 was the first y/y increase in 19
months since +0.2% in July 2008.
The index posted a record 7.7% year-on-year drop in March 2009.
In the latest month, the industries that showed slower business
from the previous month include: wholesale and retail trade including
motor vehicle sales (-1.6% m/m), information and communications (-3.7%)
as well as personal and amusement services (-3.6%).
The industries that showed increased business from the previous
month were: miscellaneous services excluding government services
(+1.1%), finance and insurance (+0.5%) and compound services (+4.1%).
The service sector employs more than half of Japan’s workforce, and
spending on services such as retailing, dining and travel is closely
tied to changes in income and consumer confidence.
The METI changed the base year for the index to 2005 from 2000,
effective with the April 2009 data, resulting in revisions to past
figures dating from January 2003.
The ministry also re-grouped some service industries to reflect
changing business patterns. In particular, it divided up Japan Post’s
huge postal and financial services, which are now being privatized, and
reallocating them into “transport and postal activities” and “finance
As a result, the category called “compound services” no longer
reflects Japan Post’s diversified postal and financial services but has
shrunk to show the limited commission business at post offices.
** Market News International Tokyo Newsroom: 81-3-5403-4833 **
JAPAN DATA: From METI:
– Japan Sep Tertiary Index -0.9% m/m vs MNI consensus -0.5%
– Japan Sep Tertiary Index posts 1st m/m drop in 4 months
– Japan Sep Tertiary Index +1.5% y/y vs Aug revised +2.5%
– Japan Sep Tertiary Index posts 8th y/y rise in row
Unfortunately my jet-setting is catching up with me and I’m badly in need of a rest. Luckily Dave has returned from his two-month overseas trip and will help me out with some relief work, starting today. I know from past bitter experience that I make some bad trading mistakes when I get overly tired so I need to rectify that.
Based on what I’m hearing in the marketplace, the next mover might be cable with talk of decent sized stops below 1.5950. Not sure if it will move during Asia, I guess a lot depends on the JPY crosses.
EUR/USD has slipped into a short-term downtrend so the bias should still be to sell rallies. Nevertheless, the medium-term trend is bullish so we shouldn’t be getting overly bearish just yet. The market is still primarily focussed on EUR woes but EUR/JPY, which is heavily traded during Asia, hasn’t managed to break lower yet. The fact that there was a new low in EUR/USD overnight is also bearish but the fact that is was only marginal sows yet more doubt.
Confusion reigns so pick a range and trade the edges.
As Jamie has pointed out below, the future for many European economies is looking decidedly weak and the word contagion is spreading fear into anyone who’s remotely bullish on the EU. The market has quickly shifted its focus away from the USD and it’s woes and onto the EUR- once again we’re in a straight ugly contest.
The AUD has held up reasonably well overnight for the simple reason that, when compared with all other currencies, it looks very appealing. Provided the market isn’t sitting overly long and prone to a risk-aversion cleanout, the AUD should find plenty of support on dips.
USD/JPY has managed another minor milestone with the re-taking of 83.00 and the short-term trend remains mildly bullish. Cable has eased somewhat on heavy profit-taking from the Russian plus some bigger Middle-Eastern accounts and it may well threaten the rumoured big stops below 1.5950 in coming sessions before the recent uptrend takes hold again.
Good luck today.
The Irish banks are the big drag on the Irish government at the moment. They are receiving funding from the ECB at 1% but the ECB is understandably very nervous about an open-ended commitment to a banking system in need of massive amounts of funding to ride out the property bust.
In order to allow the Irish government to save some measure of “face”, look for Europe to come up with some sort of funding vehicle specifically for Irish banks so that the government can claim it did not take a bailout.
That would give all sides a short-term victory but it will not solve the problems that continue to metastasize within Europe. Look no further than Greece which failed to live up to its deficit goals and is now looking to extend the terms of its bailout. There are no happy endings to this European fairy tale.
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