Wednesday, December 12, 2012

20121212 1010 Global Markets Related News.

Asia FX By Cornelius Luca - Tue 11 Dec 2012 17:11:53 CT (CME/
The appetite for risk improved further on Tuesday, as the results of Greece's bond buyback should be acceptable under the circumstances and following subsiding fears about the political situation in Italy. The foreign currencies consolidated, with the euro as the main beneficiary. The main theme remains firmly in place: the lack of progress in the "fiscal cliff" game of politics. The US stock indexes ended higher and the gold/oil spread lower. The short-term outlook for the foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on all European currencies. Good luck!

US: The trade deficit expanded to -$42.24 billion in October from -$40.28 billion in September.
Canada: The international merchandise deficit narrowed to -C$0.17 billion in October from –C$1.01 billion in September.

Today's economic calendar
Australia: Westpac consumer confidence for December
Japan: Domestic corporate goods price index for November
Japan: Machinery orders for October
Japan: Tertiary industry index for October

Asian Stocks Rise for 10th Day as Yen Falls on Fed Easing Bets (Bloomberg)
Asian stocks rose, with a regional gauge heading for the longest winning streak in more than three years, amid speculation the Federal Reserve will step up monetary easing. The yen weakened and wheat rebounded. The MSCI Asia Pacific (MXAP) Index added 0.3 percent as of 9:56 a.m. in Tokyo, gaining for the 10th day. Standard & Poor’s 500 Index futures were little changed. The yen fell against 15 of 16 major counterparts. Wheat in Chicago gained 0.3 percent after sliding more than 3 percent yesterday. The Fed will announce today $45 billion in monthly Treasury buying after a two-day meeting, according to a Bloomberg News survey of economists. President Barack Obama told ABC News he remains optimistic that a budget agreement to avert the automatic spending cuts and tax increases known as the fiscal cliff can be reached as he traded proposals with House Republicans.
Japan’s machinery orders rose for the first time in three months, a sign that companies may expect the world’s third-largest economy to return to growth in 2013. Fed officials are considering whether to supplement $40 billion a month of mortgage-bond buying with purchases of Treasuries when their Operation Twist program expires at the end of the month. If expanded as economists expect, the new program will push the central bank’s balance sheet to almost $4 trillion. Japan’s Nikkei 225 Stock Average gained 0.6 percent while the broader Topix Index climbed 0.7 percent. The Topix will rally 14 percent in the next six months as automakers lead gains amid a stronger global economy, said Kathy Matsui, the chief Japan strategist at Goldman Sachs Group Inc. Australia’s S&P/ASX 200 Index rose 0.5 percent.
Wheat futures advanced to $8.2475 a bushel after tumbling yesterday to a five-month low. A U.S. Department of Agriculture report showed global inventories will shrink less than forecast, easing concern that droughts from the U.S. to Australia were creating a grain shortage.

Asia Stocks Set for Longest Winning Streak in Three Years (Bloomberg)
Asian stocks rose, with the regional benchmark index heading for its longest streak of gains in three years, amid speculation the Federal Reserve will step up monetary easing. Honda Motor Co. (7751), a Japanese carmaker that gets 44 percent of sales from North America, added 1.6 percent. Canon Inc. climbed 2.6 percent in Tokyo after the Nikkei newspaper reported the world’s biggest camera maker aims to cut costs by as much as 80 billion yen ($970 million) next year. BHP Billiton Ltd. rose 1 percent in Sydney after PetroChina Co. agreed to pay the world’s largest mining company $1.63 billion for its stake in a liquefied natural gas project.
The MSCI Asia Pacific Index (MXAP) advanced 0.3 percent to 126.72 as of 9:31 a.m., heading for its 10th day of advance, the longest winning streak since July 2009. The gauge advanced 11 percent this year through yesterday as central banks took steps to support economic growth. The Federal Reserve will conclude a two-day policy meeting today as policy makers consider whether to continue with quantitative easing. “The Fed is expected to announce QE4, or effectively $45 billion a month buying of U.S. treasuries to replace its expiring Operation Twist,” said Cameron Peacock, Melbourne- based market strategist at IG Markets Ltd., a provider of trading services in equities, currencies and commodities. “In theory, there shouldn’t be a huge reaction to news that the Fed is initiating this program given it has been speculated on for some time and should be priced in.”
Japan’s Nikkei 225 Stock Average climbed 0.6 percent, while South Korea’s Kospi Index added 0.2 percent. Australia’s S&P/ASX 200 Index gained 0.3 percent. Markets in China and Hong Kong have yet to open.

Japanese Stocks Rise on U.S. Fed Monetary Easing Optimism (Bloomberg)
Japanese stocks rose, with the Nikkei 225 (NKY) Stock Average heading for its highest close in almost eight months, on optimism the U.S. Federal Reserve will add stimulus. Shares held gains even after North Korea launched a long-range rocket in defiance of international sanctions. Toyota Motor Corp. (7203), which gets 25 percent of its sales in North America, advanced 0.6 percent. Mitsubishi Motors Corp. (7211) jumped 7.6 percent after the Nikkei newspaper reported a withdrawal from European production will boost the carmker’s profits. Canon Inc. rose 2.1 percent after the Nikkei said the camera maker aims to cut costs by as much as 80 billion yen ($970 million) next year.
The Nikkei 225 gained 0.5 percent to 9,569.83 as of 10:10 a.m. in Tokyo, its highest since April 19. The broader Topix Index climbed 0.5 percent to 789.94, with about nine stocks rising for every five that fell. Shares rose as data showed Japan’s machinery orders rose for the first time in three months. The Fed ends a meeting today at which it may announce more bond purchases. “The Fed is expected to announce QE4, or effectively $45 billion a month buying of U.S. treasuries to replace its expiring Operation Twist,” said Cameron Peacock, Melbourne- based strategist at trading-services provider IG Markets Ltd. “In theory, there shouldn’t be a huge reaction to news that the Fed is initiating this program given it has been speculated on for some time and should be priced in. Look for a sizable negative reaction if the Fed either does a smaller size or delays the program until the New Year.”

U.S. Stocks Gain on German Confidence Amid Budget Talks (Bloomberg)
U.S. stocks rose, erasing losses since Election Day for the Dow Jones Industrial Average, after German investor confidence climbed and traders awaited progress on federal budget negotiations in Washington. American International Group Inc. added 5.7 percent as the government sells its remaining stake. Apple Inc. (AAPL) rose 2.2 percent as Morgan Stanley reiterated its overweight rating for the world’s most valuable company. Delta Air Lines Inc. (DAL) gained 5.1 percent after agreeing to buy a 49 percent stake in Virgin Atlantic Airways Ltd. from Singapore Airlines Ltd. The Standard & Poor’s 500 Index advanced 0.7 percent to 1,427.84 at 4 p.m. in New York, after rallying as much as 1.1 percent earlier. The Dow increased 78.56 points, or 0.6 percent, to 13,248.44, its highest level since Oct. 22. About 6.4 billion shares changed hands on U.S. exchanges, 3.2 percent above the three-month average.
“There’s speculation of progress on a deal, given that the two sides are still meeting and talking” about how to resolve the so-called fiscal cliff, Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said in a phone interview. “Right now, people want to see a deal, period. There will be quite a relief rally if one’s announced.” The S&P 500 is less than 0.1 percent from erasing its loss since the Nov. 6 election as President Barack Obama seeks a deal with Republican lawmakers to avoid more than $600 billion of automatic tax increases and spending cuts starting next year. House Speaker John Boehner said today he is still “hopeful” the parties can reach a budget agreement before the end of the year.

European Stocks Rise on Federal Reserve Stimulus Optimism (Bloomberg)
European stocks advanced to an 18- month high amid speculation the U.S. Federal Reserve will expand stimulus measures and as German investor confidence in November beat forecasts. ThyssenKrupp AG (TKA), Germany’s biggest steelmaker, jumped 5.6 percent after saying the sale of its Steel Americas unit is on track. Suez Environnement (SEV) Co. climbed the most in more than three months after GDF Suez Chief Executive Officer Gerard Mestrallet said his company will retain its stake in Europe’s second-largest water utility. Diageo (DGE) Plc slid 1.6 percent after it ended talks to acquire the Jose Cuervo tequila brand. The Stoxx Europe 600 Index (SXXP) rose 0.3 percent to 280.49 at the close of trade, its seventh day of gains and longest winning streak in 17 months. The gauge advanced to its highest since May 2011 and has increased 15 percent this year as the European Central Bank announced an unlimited bond-buyback program and confidence grew that U.S. lawmakers will avoid fiscal deadlock.
“The main focus is the Fed meeting,” Markus Huber, head of German sales trading at ETX Capital in London, said in a telephone interview. “A majority expect the Fed to increase its bond-purchase program, in terms of the amount that they buy each month. The Fed is concerned that with the fiscal cliff, the economy could be negatively impacted so it may consider more stimulus.”

Emerging Stocks Jump to 8-Month High on German Confidence (Bloomberg)
Emerging-market stocks rose, pushing the benchmark index to an eight-month high, as improved German investor confidence boosted markets from Poland to the Czech Republic that benefit from growth in Europe’s biggest economy. Stalexport Autostrady SA (STX) jumped the most in three years to lead gains in Warsaw, while Central European Media Ltd. (CETV) climbed the most in three months in Prague. Seoul-based Daewoo Shipbuilding & Marine Engineering Co. Ltd. led advances in emerging-market industrial stocks as HMC Investment Securities said shipbuilders have an “attractive” valuation.
The MSCI Emerging Markets Index added 0.5 percent to 1,034.55 in New York, the highest level since April 6. German investor confidence jumped more than economists anticipated in December, according to the ZEW Center for European Economic Research in Mannheim, overshadowing data out of China showing new yuan loans trailed forecasts last month. U.S. lawmakers returned to Washington today as President Barack Obama and House of Representatives Speaker John Boehner attempt to make a deal on fiscal policy. “The mood is more upbeat today, despite rather unexciting loan growth in China,” Martial Godet, head of strategy at BNP Paribas CIB in London, said by e-mail. “The ZEW index may explain most of the positive trend today.”

Bovespa Rises to Seven-Week High as Vale Leads Producers Higher (Bloomberg)
The Bovespa index rose to a seven- week high as Vale SA led raw-material producers higher on optimism that a global economic recovery will boost demand for Brazil’s commodity exports. Vale, the world’s largest iron-ore mining company, advanced to the highest in three months as the MSCI Brazil/Materials index rose the most among 10 industry groups. Cia. Siderurgica (SID) Nacional SA led gains among steelmakers. OGX Petroleo & Gas Participacoes SA and LLX Logistica SA dropped after billionaire Eike Batista denied a report saying he plans to sell stakes to the national development bank. The Bovespa climbed 0.6 percent to 59,623.34 at the close of trading in Sao Paulo, the highest level since Oct. 18. Forty- four stocks rose on the measure while 21 fell. The real weakened 0.1 percent to 2.0787 per dollar. The Standard & Poor’s GSCI index of 24 raw materials rose 0.1 percent after advancing as much as 0.6 percent earlier after German investor confidence increased more than analysts estimated.
“We’ve been seeing signs of a recovery in the global economy, making investors more optimistic about the scenario for Brazilian exporters next year,” Lucas Brendler, who helps manage about 6 billion reais at Banco Geracao Futuro de Investimentos, said by phone from Porto Alegre. Vale jumped 2 percent to 38.18 reais, the highest since Sept. 18. CSN, as Cia. Siderurgica is known, gained 2.1 percent to 11.50 reais, a one-month high.

Dollar Remains Lower Versus Euro as Fed Concludes Meeting (Bloomberg)
The dollar remained lower versus the euro after a two-day decline, with the Federal Reserve expected to announce today an expansion of asset purchases that tend to weaken the U.S. currency. The greenback slid yesterday versus most of its 16 major counterparts amid expectations the Fed will add Treasury purchases to an existing program that buys $40 billion in mortgage bonds each month. The euro was supported ahead of a meetings of European Union finance ministers and head of government this week, while Greece met its bond buyback target. The yen weakened against all its peers after Japan’s government said North Korea launched a rocket. “The bias is for the dollar to be sold,” said Kengo Suzuki, a currency strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “The Fed seems to have no intention to relax its easing stance.”
The dollar was little changed at $1.3006 per euro as of 10:10 a.m. in Tokyo after falling 0.6 percent in the previous two days. It gained as much as 0.1 percent to 82.63 yen before trading at 82.55 from 82.52 in New York. Europe’s shared currency was at 107.36 yen after rising 0.7 percent yesterday, the biggest one-day gain since Nov. 21. The Federal Open Market Committee will announce $45 billion in monthly Treasury buying that will push its balance sheet almost to $4 trillion, according to the median estimate in a Bloomberg News survey of 49 economists. It concludes a two-day policy meeting today.

Aussie Rises to 2-Month High as Stocks Gain Before Fed Decision (Bloomberg)
Australia’s dollar rose to a more than two-month high on prospects that further monetary easing by the U.S. central bank will debase the greenback. Australia’s government bonds slumped and the nation’s currency touched an eight-month high versus the yen as gains in global equities boosted demand for riskier assets. New Zealand’s dollar traded near the strongest in nine months versus its U.S. counterpart. Gains in the so-called Aussie were limited after a private report showed consumer confidence slumped the most in nine months. “Market sentiment is pretty buoyant,” said Andrew Salter, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd. (ANZ) “Provisions of liquidity from foreign central banks have been a key determinant of the Australian dollar’s performance.”
Australia’s dollar touched $1.0541, the highest since Sept. 17, before trading at $1.0535 as of 12:28 p.m. in Sydney, little changed from yesterday’s close. The Aussie rose 0.1 percent to 86.94 yen after earlier reaching 87.02, the strongest since March 28. The New Zealand dollar, known as the kiwi, was little changed at 83.95 U.S. cents from yesterday, when it touched 83.98, the highest since March 2. It fetched 69.29 yen from 69.26 yesterday, when it jumped to 69.33, the strongest since May 2010. Australian government bonds fell, with the 10-year yield rising seven basis points, or 0.07 percentage point, to 3.2 percent. The MSCI Asia Pacific Index of stocks gained 0.5 percent, following a 0.6 percent advance in MSCI’s World Index (MXWO) yesterday.

Job Openings in U.S. Rose in October to Four-Month High (Bloomberg)
Job openings in the U.S. rose to a four-month high in October, showing companies kept expanding in the face of looming tax increases and budget cuts. The number of positions waiting to be filled rose by 128,000 to 3.68 million from the prior month, the Labor Department said today in Washington. The trade deficit widened as exports slumped the most in four years, other figures showed. More openings lay the groundwork for the accelerated job growth needed to bolster consumer spending, which accounts for about 70 percent of the economy. Employment gains so far have failed to satisfy Federal Reserve policy makers, who are meeting today and tomorrow to consider further easing to spur the economy. “The labor market is healing gradually,” said Michael Gapen, a New York-based senior economist at Barclays Plc. “Policy makers would like to see more. We’re having more of the same -- moderate growth and moderate improvement in the labor market.”
Stocks rose after German investor confidence climbed and amid speculation progress was being made in talks in Washington to avoid more than $600 billion in automatic spending cuts and tax increases set to take effect next year. The Standard & Poor’s 500 Index climbed 0.7 percent to 1,427.84 at the close in New York. German investor sentiment increased to a seven-month high in December on speculation Europe’s largest economy will gain momentum next year. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 6.9 from minus 15.7 in November.

Trade Deficit in the U.S. Widens as Exports Slump (Bloomberg)
The trade deficit in the U.S. widened in October as the biggest slump in exports in almost four years outweighed a drop in imports, evidence of the slowdown in global growth. The trade gap grew 4.9 percent to $42.2 billion from a revised $40.3 billion in September that was smaller than previously estimated, the Commerce Department reported today in Washington. The median forecast in a Bloomberg News survey of 70 economists called for the deficit to expand to $42.7 billion. Exports declined 3.6 percent, the most since January 2009. The decrease in exports, which may have been exacerbated by the drought in the Midwest that caused sales of soybeans to plunge, was nonetheless broad-based, indicating cooling economies from Europe to Asia may be sapping demand for American goods, once a mainstay of the economic recovery. The slowdown in imports, which affected everything from electronics to clothing and chemicals, may also be signaling slower U.S. growth.
“The export trend is clearly slowing, and that means the export engine is faltering,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York, who projected the gap would grow to $42 billion. “The outlook seems more of the same for growth.” Stock-index futures held earlier gains after the report as German investor confidence climbed and traders awaited progress on federal budget talks in Washington. The contract on the Standard & Poor’s 500 Index maturing this month rose 0.2 percent to 1,423.5 at 8:49 a.m. in New York.

U.S. Fiscal Dispute Shows Sign of Thaw Before Deadline (Bloomberg)
Lawmakers returned to Washington today amid a potential thaw in the U.S. fiscal policy dispute, as President Barack Obama and House Speaker John Boehner attempt to make a deal to prevent spending cuts and tax increases from taking effect. Obama sounded conciliatory notes at a Daimler AG plant in Michigan yesterday. In his first comments since meeting with Boehner Dec. 9 at the White House, the president didn’t repeat frequent complaints about Republicans holding tax cuts for most Americans “hostage” because they oppose higher rates for wealthiest, and said he was ready to come to an agreement. Since Boehner complained Dec. 7 that Obama had wasted a week, statements from the speaker’s office have been milder, too.
“There is a change in tone, obviously,” Julian Zelizer, professor of history and public affairs at Princeton University in New Jersey, said in an interview. After building public support for higher tax rates for the highest earners, he said, Obama is negotiating and “preparing his own party for a possible deal” by sending signals about his willingness to cut entitlement programs including Medicare and Medicaid. While the private talks continue between the administration and aides to Boehner, each side is insisting publicly that the other must give in first. The result is a prolonged wait for more than 500 members of Congress who aren’t talking with Obama and will have to decide if they can accept a deal that he and Boehner may ultimately reach.

Fed Seen Pumping Up Assets to $4 Trillion in New Buying (Bloomberg)
The Federal Reserve will amplify record accommodation tomorrow by announcing $45 billion in monthly Treasury buying that will push its balance sheet almost to $4 trillion, according to a Bloomberg survey of economists. Forty-eight of 49 economists predict the Federal Open Market Committee will purchase Treasuries to bolster an existing program to buy $40 billion in mortgage bonds each month. The panel pledged in October to continue that plan until the labor market improves “substantially.” “It’s going to be massive and open-ended in size,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York and a former New York Fed economist. Chairman Ben S. Bernanke and his FOMC colleagues will press on with purchases at least through the first quarter of 2014, according to the median estimate in the Dec. 7-10 survey. They are expanding the balance sheet beyond $2.86 trillion in a bid to spur growth and lower an unemployment rate of 7.7 percent.
“They view this stimulus as what’s needed to sustain the economy” and reinforce improvements in industries such as autos and housing, said John Silvia, chief economist at Wells Fargo & Co., the biggest U.S. home lender. Stocks rose today, with the Standard & Poor’s 500 Index erasing its decline since Election Day, as investors speculated progress was being made in U.S. budget talks. The S&P 500 climbed 0.8 percent to 1,430.36, the highest since Oct. 22, at 11:02 a.m. in New York. The yield on the 10-year Treasury note climbed to 1.65 percent from 1.62 percent yesterday.

Wholesale Inventories in U.S. Rose More Than Forecast in October (Bloomberg)
Inventories at U.S. wholesalers rose more than forecast in October, a sign goods are piling up in the face of slowing demand. The 0.6 percent increase in stockpiles followed a 1.1 percent gain in September, the Commerce Department reported today in Washington. The median forecast in a Bloomberg survey was a 0.4 percent advance. Sales declined 1.2 percent, the biggest drop since June. While the Commerce Department said it couldn’t quantify the effect of Sandy on the data, it said companies reported both positive and negative influences from the storm. A global slowdown and looming U.S. tax and government spending changes may weigh on orders, indicating distributors will want to keep a tight rein on stockpiles. “There’s still a lot of uncertainty,” Paul Ashworth, chief U.S. economist at Capital Economics Ltd. in Toronto, said before the report. “Consumers probably are losing a little bit of momentum.”
At the current pace of sales, wholesalers had enough goods on hand to last 1.22 months, the most since October 2009, the report showed. The median forecast for wholesale inventories was based on a Bloomberg survey of 29 economists. Estimates ranged from a decrease of 0.5 percent to 0.7 percent gain. The prior month’s figure was unrevised. Wholesalers’ stockpiles of durable goods, or those meant to last several years, increased 1 percent, boosted by automobiles and computer equipment, today’s report showed. Demand for goods meant to last at least three years dropped 0.9 percent.

Pimco Sees Global Growth Slowing After U.S. Tightening (Bloomberg)
Pacific Investment Management Co., manager of the world’s largest mutual fund, said global growth will be hampered next year by a slowdown in the U.S. economy. Global growth will slow to 1.3 percent to 1.8 percent from about 2 percent this year as the private sector isn’t healthy enough to step in and extend credit amid deleveraging, Saumil Parikh, a portfolio manager who leads Newport Beach, California- based Pimco’s cyclical forum, said in a December report being posted on the firm’s website today. Economists expect growth of 2.5 percent in 2013, the average forecast in a Bloomberg survey. “Central banks, while they are effective in boosting asset prices, we think gradually they’re losing effectiveness in helping the real economy,” Parikh said in a telephone interview before the report was released. “The low growth rate of corporate profits and the low rate of investment means a near stall speed of the global economy.”
U.S. economic growth will drop to 1.25 to 1.75 percent in 2013 from 2.2 percent in the four quarters ended Sept. 30 because of “a policy mix of untimely fiscal tightening and increasingly ineffective monetary easing,” Parikh said in the report. Economists predict 2 percent growth for the U.S. in 2013 for the full year, the average of 79 responses in a Bloomberg survey. Growth will be buoyed by residential investment and an increase in home prices, which will support consumption in the U.S. economy as long as interest rates remain low, he said. European Central Bank President Mario Draghi’s plan for an unlimited bond-buying program to fight speculation of a currency breakup was positive, Parikh said. Even so, fiscal austerity will continue to be a drag on growth in 2013 as the euro-area economy shrinks 1 percent to 1.5 percent, he predicted.

Japan Machine Orders Rise as Abe Vows Stimulus Ahead of Poll (Bloomberg)
Japan’s machinery orders rose for the first time in three months, a sign that companies may expect the world’s third largest economy to return to growth in 2013. Orders, an indicator of capital spending, climbed 2.6 percent in October from the previous month, the Cabinet Office said today in Tokyo. The median estimate of 25 economists surveyed by Bloomberg News was for a 3 percent increase. Large orders can cause volatile results. Rising orders and production in October suggest the economy is laying the foundations for recovery after contractions in the last two quarters. The yen has weakened around 3.7 percent against the dollar in the last month, while Shinzo Abe’s Liberal Democratic Party, leading in polls before elections on Dec. 16, has pledged fiscal stimulus to stoke growth.
“Companies are still cautious but a weaker yen and signs of recovery in the global economy are providing some relief,” said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management Co. “Japan’s economy is going to have a moderate recovery.” The Nikkei 225 Stock Average was 0.6 percent higher at 9:37 in Tokyo, after rising earlier in the morning to its highest level in almost eight months. The yen was little changed at 82.55 per dollar. Komatsu Ltd. (6301) the world’s second-biggest maker of construction and mining equipment, plans to spend as much as 50 billion yen ($606 million) over the next three years to improve efficiency at four domestic plants, Hiroshi Ishihara, a spokesman for the Tokyo-based company said yesterday.

Lee Bequeaths Full Employment to South Korean Successor (Bloomberg)
South Korean President Lee Myung Bak’s legacy of full employment has failed to bolster his party’s popularity or revive consumer confidence, prompting both candidates in Dec. 19 elections to pledge more social spending. The jobless rate was 3 percent in November, a government report showed in Gwacheon today, unchanged from October at a low reached just five times since mid-1999. A widening wealth gap on Lee’s watch, which ends in February, has accompanied the jobs strength and stoked concern that South Korea’s export success hasn’t translated into middle-class financial security. “The economy is relatively strong in terms of job growth, but the underlying imbalances are plaguing the country,” said Lee Jae Hyung, a fixed-income analyst at Tong Yang Securities Inc. in Seoul. “The next president will likely spend more to boost economic growth and provide more welfare benefits. Inflationary pressure may creep up.”
Both ruling-party candidate Park Geun Hye and opposition nominee Moon Jae Inare campaigning to increase aid to lower- income families. Extra government spending could fuel price gains just when the central bank is facing a tighter inflation target for next year of 2.5 percent to 3.5 percent, compared with the current 2 percent to 4 percent. The seasonally unadjusted jobless rate was at 2.8 percent in November, also unchanged from October, today’s report showed.

German Investor Confidence Jumps to 7-Month High on Outlook (Bloomberg)
German investor confidence jumped more than economists forecast to a seven-month high in December on speculation Europe’s largest economy will gather momentum next year. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed to 6.9 from minus 15.7 in November. Economists predicted a gain to minus 11.5, according to the median of 38 estimates in a Bloomberg News survey. The German economy will contract this quarter and stagnate in the first three months of next year as the sovereign debt crisis curbs demand for its goods in the euro area, the Bundesbank forecast last week. Still, the benchmark DAX share index has rallied more than 17 percent since the European Central Bank pledged on July 26 to save the euro and unveiled an unlimited bond-purchase program. Business confidence unexpectedly rose in November.
Germany faces “a very favorable environment, largely on the back of expansionary monetary policy,” said Ralph Solveen, head of economic research at Commerzbank AG in Frankfurt. “Should the sovereign debt crisis continue to ease in the next few months as we expect, this implies a significant revival of the economy in the course of 2013.” ZEW’s gauge of the current economic situation rose to 5.7 from 5.4 in November. The euro gained after the report to trade at $1.2965 at noon in Frankfurt, up 0.2 percent today.

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