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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (4679)	4/19/2004 11:48:11 PM
From: mishedlo	Respond to of 116555

China mulls exchange rate reforms, readies plan to cool economy Tuesday, April 20, 2004 4:07:20 AM BEIJING (AFX-ASIA) - China is studying a reform of its currency exchange rate mechanism to make it more flexible, a senior government official said The official, who is close to monetary policy issues but asked not to be further identified, said that authorities are also preparing further measures to ensure that the domestic economy does not overheat "We are studying the currency mechanism to make it more rational," the official told reporters "In the future, the currency will become more flexible and better reflect overall economic conditions." The official did not give a timetable or details of how this might be done China's currency is pegged at about 8.3 yuan to the US dollar, but Beijing has signalled it is looking at ways to make the exchange rate mechanism more flexible. Economists have suggested widening the band in which the currency is permitted to trade or linking the yuan to a basket of currencies The official did not say whether Beijing would raise interest rates to head off mounting inflationary pressure, but it appeared that no move would be made anytime soon "The People's Bank of China (central bank) believes there is overheating. They have already prepared further measures, but they need to observe the effect of the measures already adopted before taking a decision," said the official China has already raised reserve ratios on deposits twice, and has tried to deflect bank lending away from certain sectors seen as overheating fxstreet.com

To: orkrious who wrote (4679)	4/19/2004 11:51:16 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

National Australian Bank survey shows Australian business conditions weaken Tuesday, April 20, 2004 3:22:24 AM SYDNEY (AFX-ASIA) - National Australia Bank said its quarterly survey of Australian business conditions showed a weakening in the March quarter from near record levels previously It said most measures within the survey remain at robust levels with modelling suggesting trend growth in domestic demand of around 1.0 pct in the March quarter compared with 1.75 pt in the December quarter, implying growth in domestic demand of around 5.0 pct over the year to March 2004 NAB said the survey recorded weaker readings for forward orders, capacity utilization and capital expenditure Confidence remained broadly unchanged, but had fallen in late 2003 following Reserve Bank of Australia's decision to increase rates It said the survey showed private consumption, after increasing by around 5.5 pct during 2003, is likely to slow to around 4.5 pct through 2004 and to around 3.0 pct in 2005 "That slowing reflects the lagged impact on wealth of a flattening in house prices together with the recent (and prospective further) tightening in interest rates," NAB economists said But, they said, solid income growth and assumed tax cuts in the forthcoming Federal Budget to be announced on May 11, will help maintain strong consumption growth over the next 12 months The economists said relatively strong levels of profitability, high levels of capacity utilization and still strong domestic demand should maintain underlying business investment at growth rates of around 8.0 pct in 2004 before moderating to around 4.0 pct next year With a pick-up in rural exports, and strong global demand, the NAB economists are forecasting net exports to contribute significantly to growth over the next 12-18 months "After detracting nearly 2.5 pct percentage points from growth during 2003, we expect net exports to add around 0.75 percentage points to growth in both 2004 and 2005," they said The NAB economists said they had not significantly altered Gross Domestic Product growth forecasts because of the survey results "The big picture is still one of an expected slowing in domestic demand during 2004, but one that is more than offset by stronger net exports in the face of improving global conditions and much stronger rural production" They said, GDP growth in the March quarter 2004 will be shown to have been reasonably strong at around 1 pct while annual GDP growth for 2004 has been revised upward to 4.25 pct from 4.0 pct An early estimate of GDP growth for 2005 is 3.5 pct with the easing in growth reflecting tightening global monetary policy The economist said Australia's current account deficit as a percentage of GDP will gradually decline to 4.5 pct in 2005 after staying around 6.0 pct in the first half of 2004 Employment expectations in the survey pointed to reasonably strong growth in near term but could slow to around 2.0 pct per annum over the next 12-18 months in the face of slower domestic demand, the NAB economists said They said this could see the unemployment rate remain around 5.5 pct fxstreet.com

To: orkrious who wrote (4679)	4/19/2004 11:54:38 PM
From: mishedlo	Respond to of 116555

UK house prices in March rise at their fastest pace since Oct 2002 - RICS Tuesday, April 20, 2004 12:45:33 AM LONDON (AFX) - House prices in the UK in March grew at their fastest pace since October 2002, according to the latest monthly survey from the Royal Institution of Chartered Surveyors RICS found that 45 pct more surveyors reported a rise in prices in March than a fall, up from 39 pct in February. Strong demand and low supply has been supported by improvements in the wider economic climate, with unemployment in January at its lowest level for 30 years, RICS said Price inflation remains particularly strong in northern England and Wales but is accelerating across the whole country, it added. Even the south east, which includes London, saw house prices rise up to levels not seen since the latter half of 2002 "Two rate rises by the Bank of England in the last six months have done little to dampen appetite for bricks and mortar which is increasingly perceived as the best investment," RICS added The BoE's rate-setting monetary policy committee is tipped to raise borrowing costs another 0.25 points to 4.25 pct when it meets early in May over mounting concerns that UK house price inflation is unsustainable Some market commentators are even suggesting that the MPC consider hiking by 0.50 points to help bring house price inflation under control fxstreet.com

To: orkrious who wrote (4679)	4/19/2004 11:58:56 PM
From: mishedlo	Respond to of 116555

Waiting for clues from Greenspan RPT - US Treasurys end lower as Greenspan's Hill date awaited Monday, April 19, 2004 11:39:27 PM CHICAGO (AFX) - US Treasury prices declined, sapping early modest gains ahead of an eagerly anticipated Capitol Hill appearance by Federal Reserve Chairman Alan Greenspan later this week A thin week for economic data left the bond market to focus on Greenspan's Wednesday appearance before the Joint Economic Committee, after traders last week began pricing in stronger odds for a summer interest-rate hike. This week also holds several speeches from other Fed officials "There's some anxiety ahead of Greenspan," said Josh Stiles, an analyst at IDEAGlobal. He said the market may be speculating that Greenspan will "sound tougher" in defending the economy from inflation. He cited a Wall Street Journal article suggesting the central bank will have to more fully acknowledge the economic recovery in its policy statement in early May The bond market also had to digest a forecast-matching gain in Monday's sole economic release, the leading economic indicators report, although it showed little immediate reaction to the report Weaker-than-expected economic data out late last week and soothing comments on inflation from some Fed officials initially helped the bond market halt a string of six straight declines, and Friday's sentiment carried over to Monday's early trading, said analysts The benchmark 10-year note closed down 6/32 at 97 1/32. Its yield, which is used to set mortgage and corporate borrowing rates, stood at 4.37 pct vs 4.34 pct at Friday's close. Yield and price move inversely The 30-year bond fell 13/32 at 102 16/32, yielding 5.20 pct vs 5.16 pct. The 5-year note was 5/32 lower at 98 22/32 to yield 3.41 pct vs 3.36 pct. The 2-year note fell 1/32 at 98 30/32, yielding 2.05 pct vs 2.03 pct The bond market rose in Friday's session but ended lower on the week. The benchmark yield rose as high as 4.45 pct last week, its highest level since early November as consumer price data raised inflation worries. Inflation eats away at the value of fixed interest payments earned on bond investments After the data, the federal funds futures market indicated an August rate hike had been fully priced into the bond market, while the still-slim chance for a June rate hike increased But Fed Gov Ben Bernanke warned about reading too much into one report, reaffirming his view for tame inflation over the next few years The mixed signals have left the bond market eagerly awaiting some clarification from the nation's top interest-rate policymaker "Thanks to the remarkable turnaround in the economic data over the past two weeks, Chairman Greenspan's testimony ... will be subject to the kind of scrutiny normally reserved for his official semiannual reports to Congress," said Lou Crandall, chief economist with Wrightson ICAP "In July and February, Greenspan could rightly argue that little had changed in the Fed's approach. This week, however, it will be difficult to deny that the performance of the economy has changed to some extent. The question is: how much?" Crandall said he expects April payrolls data due in early May to fall short of the brisk 300,000-plus gain reported for March and for US retail sales to fizzle after a 1.8 pct surge. Accordingly, the Fed's not about to raise interest rates in June. "On the growth front, Greenspan can easily argue [to lawmakers] that the jury is still out," he said Less bearish The latest poll of institutional fixed-income investors conducted by Connecticut-based Ried Thunberg & Co, released late Friday, shows sentiment toward the 10-year note was less bearish last week The firm's index measuring sentiment for the note by June edged up to 44 from 42. Its December index improved slightly to 39 from a record-low 37 in the previous week The firm each week queries 55 money managers controlling a combined 1.4 bln usd "The modest improvement occurred after a very volatile week with Treasurys plunging in response to much stronger-than-estimated retail sales and CPI, the rebounding on weaker-than-estimated industrial production and consumer confidence and soothing comments from several Federal Reserve officials," Ried Thunberg said Among its respondents, 58 pct still do not expect a monetary policy tightening at the May, June or August meetings of Fed policymakers "Participants in our survey have been more accurate than the fed funds futures," Ried Thunberg noted Widespread strength The US index of leading economic indicators rose 0.3 pct in March, as expected, the Conference Board reported Monday. "Economic growth in the first quarter was strong and the second quarter may be as good or better," said Ken Goldstein, economist for the board. In March, six of the 10 leading indicators improved: vendor performance, money supply, jobless claims, building permits, orders for consumer goods and consumer expectations. Over the past six months, seven of the 10 indicators have improved fxstreet.com