Banking Center Updates

Developments in the banking sector have somewhat overshadowed German economic news today. Yet German GDP data may stand in contrast to US GDP due this morning. It’s not that German Q3 GDP was stellar. Q3 GDP was unchanged from the preliminary data at 0.7% q/q (and -4.8% y/y) and a breakdown of the data showed consumption continued to fall (down 0.9%q/q), offset by investment spending (up 1.3% q/q) as companies invested in machinery and equipment while exports gained 3.4% though that was offset by a 5.0% gain in imports with next exports detracting 0.5% from GDP. Still US GDP is expected to be revised lower to 2.8%. Other euro zone data were mixed in line with today’s other US data (confidence, housing data and the Richmond Fed index). Germany’s Nov Ifo survey was stronger than expected at 93.9 vs. 92.5 exp while expectations rose from 96.8 to 98.9 (97.3 exp) but the Ifo’s Nerb warned it was still too early to consider removing stimulus. French business confidence was disappointing, remaining unchanged at 89 in Nov vs 91 expected. The euro remains inside yesterday’s range, recovering some of its early losses. Still the currency has been unable to rise back above the $1.4960 area and an unexpectedly large downward GDP revision could see the single currency pull back toward $14890.