Now that 2012 has arrived and the markets are beginning to trade again, many investors are repositioning themselves for a recession or recovery in the months ahead. The economic news that will emerge in January will likely provide a glimpse into the economic climate that will follow in 2012.
Let’s quickly examine what has already been occurring in the global markets since Monday.
Europe and Asia
On Monday all of the European markets rallied on the first trading day of 2012, except for the British market which was closed. The Stoxx 600 closed up 1.1% and the German Dax traded up 3% after good manufacturing numbers were released in Germany.
China’s PMI manufacturing number also beat forecasts, providing some extra boost for optimism. Germany’s purchasing manager’s index rose to 48.4 while China’s PMI rose to 50.3 according to Bloomberg.
Ten year French bonds fell for a fourth day, raising their yields nine basis points. France plans to sell 16.9 billion of debt later this week. German 10 year bonds declined, increasing their yields eight basis points to 1.91%. Germany will auction 5 billion of bonds on January 4th.
Italian 10 year bonds fell 19 basis points to 6.92%.
Currently, Italy’s 10 year bond is trading at 6.89%
Uneven Growth in Asia
Australia’s manufacturing expanded in December, the first time in 6 months while Singapore’s economy declined for a second time in 3 quarters when it rose 1.5 %. Singapore’s GDP decreased 4.9% in the fourth quarter but their for 2011 their GDP was 4.8% .
Many economists are questioning the recent weak growth numbers out of Singapore in light of the better than expected PMI manufacturing numbers from China and Australia alongside the growing fears of a global slowdown and its ability to stall growth in Asia during 2012.
A batch of U.S. economic news will be released this week.
U.S. Economic Calender for this week:
On January 3rd the U.S. market will see ISM and Construction spending. On January 4th Motor sales and Factory Orders. On January 5th Jobless Claims and ISM services. On January 6th Nonfarm Payroll and Unemployment Rate.
American Consumer Spending
Americans spent heavily on credit cards during the holidays and will soon be facing credit card bills.
Consumer spending accounts for 70% of America’s GDP. Many economists are left wondering whether consumer spending continue to grow in the first quarter of 2012 and help to sustain America’s recovery?
Spending levels during the first quarter of 2012 will be closely watched. Some American businesses plan to shed their part time seasonal holiday staff. Many are left wondering whether the U.S. unemployment level of 8.6% will be maintained or move much lower.
Refinancing Global Sovereign Debt in 2012
Bloomberg’s Linda Yeu reported today that Japan will need to refinance 3.12 trillion of debt in 2012.
The U.S. will need to refinance 2.99 trillion.
Italy will need to refinance 500 billion.
France will need to refinance 421 billion.
Germany has 330 billion to refinance in 2012.