Currencies: Dollar Index at Support

The dollar fell on Friday as risk sentiment and US stocks rose. US trade deficit widened more than anticipated on strong import growth and US consumer confidence unexpectedly fell. The S&P 500 rose 6.24 to 1,093.48. The yen was supported by yuan revaluation speculation. The euro rose on Q3 GDP data showing the eurozone economy had its first quarterly expansion since Q1 2008. Sterling was boosted by a planned merger of British Airways and Iberia. The Canadian dollar advanced on global recovery optimism and a narrowing Canadian trade deficit. The Australian dollar closed above the 0.93-handle, supported by Chinese revaluation speculations and improving global economic growth. See also other recent currency reports.

Globicus US LEI: No Double-Dip Recession and Job Growth in Sight

There are no signs of a double-dip or W recession in the US. The Globicus/qEcon Research short leading and long leading indexes continue to improve, suggesting that the US economic recovery is on track and economic conditions should progress considerably by the end of Q3 2009. The overall leading economic index’ growth rate reached 11.5 in October, its highest level since the end of 1981-82 recession. Both the short and long leading indexes’ growth rates were strongly positive in October, at 11.2 and 11.7, respectively, indicating the ongoing US economic expansion is intact for at least the next 6-9 months. Meanwhile, the coincident index, used in determining the length of the recession, has been flat since the early summer. The index made a low in June, rose slightly in July, fell back to the June low in August and rebounded modestly in September. The coincident index’ growth rate, since hitting a low of -9.3 in April, had steadily risen, to -5.0 in September. This indicates the recession may be officially declared over in August. It could also be possible in June, but heavy job losses that month may prevent the Dating Committee to choose June. US GDP rose at a 3.5% annualized rate in Q3 2009, the first expansion in more than a year, and will likely grow at a 4-5% range in Q4.

US Macro: Oct US Nonfarm Payrolls -190K; Unemployment Rate at 10.2%

US nonfarm payrolls fell a more-than-expected 190,000 in October after falling a revised 219,000 in September, figures from the Labor Department showed. Revisions to August and September added 91,000 to payrolls, bringing the net loss in today’s report to 99,000. The unemployment rate soared more than expected to a 26-year high of 10.2% in October from 9.8% in September. See also other recent updates on US economic data and macroeconomic trends.

Europe Macro: ZEW EMU and German Business Sentiment in November

The ZEW eurozone economic expectations index declined to 51.8 in November from 56.9 in October, indicating eurozone investor confidence unexpectedly fell this month, according to data from the ZEW Centre for European Economic Research.

Asia Macro: October Japanese Economy Watchers Survey

Japan’s merchant confidence fell to a 5-month low in October, with the Japanese current conditions index unexpectedly falling to 40.9 from September’s 43.1, according to the Cabinet Office’s economy watchers survey.

Equities: Daily US Stocks

Major indexes are in strong uptrends. However, stocks are overbought and need to consolidate gains.

Fixed Income: Credit Spreads Indicate Recovery

Treasury interest rates have risen off their lows, credit spreads have narrowed and interbank rates have declined, indicating the financial panic is over and the economic outlook is improving.

Commodities: Daily Commodities

Commodities have bottomed and are moving higher.

Canada's LEI Up 1.1% m/m in September

Canada’s leading economic indicators index rose a more-than-expected 1.1% m/m to stand at 220.2 in September, a fourth consecutive monthly gain, after an upwardly revised 1.2% m/m advance in August, LEI data from Statistics Canada showed, signaling the Canadian economy is recovering.

UK LEI Signals UK Economic Recovery

The UK leading index increased from -2.9 in February to -0.5 in March, signaling a UK economic recovery is in sight.

Japanese LEI Rises for 7th Straight Month in September

The Japanese leading economic indicators index, a measure of future economic activity, advanced to 86.4 in September, a seventh straight monthly gain, from 83.2 in August, according to preliminary September LEI data released by the Cabinet Office.

Australia's LEI Shows Pace of Australian Economic Recovery Has Improved Remarkably

The annualized growth rate of the Westpac–Melbourne Institute leading economic index rose to 1.7% in August from -1.0% in July, supporting “Westpac’s forecast that GDP growth in Australia will increase from 1.5% in 2009 to 4% in 2010,” Westpac Banking Corp. and the Melbourne Institute reported.

A Primer on Deflation

In the WWII period, low inflation did not induce fears of deflation because economists believed the institutions created by the Keynesian revolution had a bias toward inflation. After more than 50 years of absence, deflation has now reappeared on the agenda as something to worry about. So what is deflation? Deflation is defined as persistent declines in the general price level.