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Canada Cost of Living Ticks Higher In April

The Ottawa-based Statistics Canada reported today consumer price indexes for April, signaling the CPI rose another 0.4 percent last month from March, up from analysts`median estimate of 0.3 percent. CPI rose 0.2 percent in the year ended April from 1.9 percent. 

Canada`s Core CPI rose 0.4 percent last month, from 0.3 percent and the 0.2 percent projected by analysts beofre the report, while company wiith the year ago, Core CPI also rose to 2.1 percent from 1.9 percent and projected as well.

Moody`s Cut the Credit Ranking of Several Spanish Banks

Tension intensified in markets today after Moody`s, the U.S. rating agency, downgraded 16 Spanish banks, including the largest bank in Spain, where fears spread widely in markets as the agency affirmed the pressures on Spanish bonds in the debt market amid the double-dip recession facing the economy in addition to rising unemployment, which reached 24.4% in April.

Moody`s downgraded the rating of Banco Santander and Banco Bilbao Vizcaya Argentaria, the largest two lenders in Spain, by three grades, citing the recession and mounting loan losses, indicating the current pressures facing the financial sector in Spain.

The agency said in a statement that “(Spanish) banks will continue to face highly adverse operating and market funding conditions that pose a threat to their creditworthiness,” adding that “the Spanish economy has fallen back into recession in first-quarter 2012, and Moody’s does not expect conditions to improve” any time soon.

German PPI Declines in April

German PPI reached 2.4% in the year ended April compared to a prior of 3.3%, below expectations of 2.5%. On the month, the reading came in at 0.2% from 0.6% in March, lower than estimates of 0.3%.

Fitch Ratings Downgrades Greek Debt Ranking

Fitch Ratings downgraded the credit ranking of Greece by one notch to CCC from B- on concerns the nation might have to leave the one-currency bloc amid the current political instability and the split over the second bailout deal and the austerity associated with this financial aid provided by International Lenders.

The rating agency clarified that the Greek inability to form a government had raised concerns regarding the nation`s commitment to the deal stroke with international leaders, especially as more and more Greeks are joining the anti-austerity campaign.

Fitch said in a statement that “the strong showing of ‘anti-austerity’ parties in the May 6 parliamentary elections and subsequent failure to form a government underscores the lack of public and political support.”

Japan raises its economic assessment for first time in 9 months

Japan’s government raised its economic assessment for the first time in nine months although Japanese stocks are falling to the lowest since 2001 on concerns about Europe’s debt crisis and worries over further worse environment.

Moreover, Japanese economy is recording a moderate recovery reflecting an emerging demand for reconstruction, especially after the current expansion that exceeded expectations for Japan’s GDP.

House prices decline in China

House prices declined significantly in China in 46 from 70 regions in April. Wenzhou city led the drop by losing 12.3% as well as Beijing that declined by 1.0% and 1.3% in Shanghai.

Meanwhile, the Minister of Housing announced that China continues with its plan to curb house prices and create a balance in prices. Since the Chinese government has pledged to set prices and mortgages with the development of rules.

Machine Orders in Japan Revised Lower

The Japanese economy released the final reading of its annual machine tool orders for April, where the actual reading recorded an incline by 0.4% compared with a previous incline by 0.5%.

Unemployment in Hong Kong Drops

Hong Kong’s economy released its seasonally adjusted unemployment reading for April, where the actual reading declined to 3.3% from 3.4%, opposed to the expected rise to 3.5%.

EIA Natural Gas Storage

Today`s released EIA NBatural Gas Storage Change for May 11 rose actually to come in at 61 BCF; higher than the prior 30 BCF and market projections of 56 BCF

U.S. leading indicators drop, signal contraction ahead!

The U.S. leading indicators today offered downbeat signals for the expectations by business for the coming three to six months, where the index fell below zero to reflect the downbeat view for the economy in the coming period.

The index dropped in April to -0.1% from 0.3% and missed expectations for 0.1% expansion. The downside pressured that led the decline was the jobless claims index which dropped to -0.19% from 0.04% alongside building permits that dropped to -0.2% from 0.23% and stock prices that fell to -0.1% from 0.10%, the declines offset the gains seen in ISM new orders that leaped to 0.6% from -0.2% and consumer goods orders that increased to 0.02% from -0.07%. 

Philadelphia Fed index unexpectedly slumps in May

The U.S. economy continues to offer mixed signals and adds to the market anxiety. After good housing and industrial data yesterday the surprise was from the Phili Fed Index today as the performance deteriorated unexpectedly.

The Philadelphia Fed Index slumped in May for the second consecutive month to -5.8 down by 14.3% from the previous month at 8.5 and it opposed the expected rise to 10.0.

Prices paid dropped significantly on the month to 5.0 from 22.5 while prices received dropped to -4.5 from 9.4. New orders also slowed to -1.2 from 2.7 yet shipments rose to 3.5 from 2.8 and inventories dropped to 4.5 from 8.2. 

Jobless Claims In U.S. Stood At 370K Last Week, Above 365K Forecast

The U.S. Labor Department today reported that the initial jobless claims of the week ended May 12 were unchanged at 370 thousand (originally 367 thousand) in the previous week, but exceeding analysts` median estimate of 365 thousand.

Continuing claims of the May 5 week came topped the market consensus, rising to 3,265 thousand from 3,247 thousand (revised from 3,229 thousand) the week ago. Analysts called for a median 3225 thousand.

Exluding the weekly volatility, the 4-week moving avergage of the jobless claims fell to 375 thousand from 379.75 thousand last week, while for continuing claims, the 4-week moving average slipped to 3,282.750 thousand from 3,264.500 thousand.

Canada Wholesale Sales Rose 0.4% In March

Sales at Canadian wholesalers rose 0.4 percent in March, following a 1.5 percent increase (originally 1.6 percent) in the week ago, slightly up from analysts` median estimate of 0.3 percent.

Wholesale sales increased for the ninth time in 12 months in March, supported by strength in the motor vehicle and parts subsector, Ottwata-based Statistics Canada said on Thursday.

After confirming recession, Spain’s borrowing costs rise at bond sale

Spain today is on the run with downbeat news. The early figures confirmed the relapse into a double-dip recession as the economy contracted by 0.3% in the first three month at the same pace in the previous quarter and followed by a downbeat bond sale this afternoon as investors are skeptic over the outlook for the nation amid renewed debt tension.

Spain met the maximum target and sold 2.5 billion euros of bonds due 2015 and 2016 but the borrowing costs continued to rise.

The yield on the January 2015 bond nearly doubled to 4.375% compared to 2.89% at the previous auction. The bid to cover ratio was 4.47 times also strongly above the previous 2.41 times the previous auction, as this shows investors are willing to take the risk on the outcome for rising return, and somewhat shows faith that Spain will not be allowed to fall!

As for the bonds due July 2015 the average yield recorded was 4.876% rising form the May auction at 4.037%, demand was also strong with the bid-to-cover ratio at 3.01 from 2.88. The Treasury also sold April 2016 bonds at 5.106% average yield.

Investors are still tensed and despite the fact that demand is still strong on Spanish bonds investors still did cut their exposures to Spanish debt amid chronic economic growth conditions with the economy back in recession, joblessness at 24.4% and austerity measures that will force the recession to drag.

The problems are even worse as the nation suffers to overhaul a fragile financial sector and carries needed reform that is still not yielding any benefits and most recently the government had to take over Bankia to prevent its collapse.   

The government is trying to rebuild confidence as Mariano Rajoy continues the reform and austerity. The Treasury figures still show that foreign investors cut their exposure to Spanish det to 219.6 billion euros as of the end of March compared with 281.4 billion euros at the end of last year, and the ailing banking sector increased its exposure to 170.6 billion from 94.9 billion euros which is even a riskier scenario shall Spain continue to struggle and be forced to international lenders as its banking sector could be the first victim of any sovereign default, and starting as soon as July with Greece! 

Spain experiences a technical recession after recording 0.3% contraction in the 1q

Spain, the euro area`s fourth-largest economy, suffered a technical recession as the final GDP reading showed 0.3% contraction in the quarter through March, moving in line with analysts` forecasts, following the 0.3% shrink in the last quarter of 2011.

On the year, the reading also matched expectations to record 0.4% contraction from a prior of 0.3%.

Details showed that gross fixed capital formation led the decline with 8.2% annual drop, government spending slipped 5.2%, and household spending plummeted 0.6%.  

The reading raises concerns the embracing economic and fiscal situation in Spain would eventually force the country to ask for an international bailout.

The European Commission in its latest forecasts released last week raised contraction forecasts for Spain to 1.8% this year from a 1.0% contraction in February.

As of 07:30 GMT, the euro is trading at 1.1270 versus the dollar from the day`s opening of 1.2714.