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By HaleStewart November 30, 2013 11:23 am
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International Week In Review: Generally Positive Numbers Continue

The biggest news last week was Brazil raising its short term rates another 50 basis points to 10%.  As shown in the chart below, the Brazilian cental bank is clearly in rate increase mode in an attempt to lower inflation and defend the real.


Japanese statistics added more fuel to the rebound under Prime Minister Abe.  Retail sales increased 2.3% year over year (YOY).  They also had some great news on the inflation front: A gauge of Japan’s prices (JCPNEFEY) rose the most in 15 years as higher energy costs fueled broader inflation pressures, in a sign Prime Minister Shinzo Abe is making progress in stamping out deflation.   And finally, manufacturing posted some of its strongest numbers since 2009.  A look at the Markit chart highlights the underlying strength in the Japanese manufacturing sector:

The EU again printed somewhat concerning economic numbers.  Infaltion printed at a .9% rate.  While this was 2/10 of a percent higher than the preceding month, it doesn't eliminate deflation fears.  Unemployment dropped from 12.2% to 12.1%, but this could be considered statistical noise; unemployment is still at very high rates.  Both of thes numbers bolster the rationale behind the ECB's recent 25 basis point rate cut.

Indian GDP increased 4.8% YOY.  However, ther overall Indian growth rate is still subpar by the country's previous standards as shown in this chart:

Canada printed its best GDP growth in two years.  The best news in the report was an increased of .6% in business fixed investment, which had been negative in hte second quarter report due to weak exports and an unccertain international situation.

US numbers were generally positive.  The housing rebound continues with both housing permits and prices increasing.  However, pending home sales dropped for the fifth month in a row, indicating higher interest rates are taking a toll.  Manufacturing numbers were generally postive as well, with good numbers for the Chicago PMI and Richmond Fed.  While durable goods decrease 2%, it is still in a moderate uptrend as shown by a longer chart of the data:

The series was stuck at the 220,000 level for about a year and a half, but has recently started to move up to the 230,000 level.

The overall tenor of the news was positive.  Brazil has elected to fight inflation at the expense of growth, which is a positive long-term development.  The EU news showed the fragility of the recent expansion and bolstered the ECBs rate cut rationale.  The US continues its "moderate" expansion and Abenomics looks to be gaining traction.

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer

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