For the US economy the Labor
Department reported that the Consumer Price Index (CPI) jumped 0.4
percent in February, driven higher by price increases in food, energy,
shelter, and tobacco and core PPI, which excluded food and energy was
double economists’ expectations at 0.4%. Industrial production rose by
1% in February, whilst March consumer confidence fell to 88.8, as
measured by the University of Michigan index, after February’s 91.3. The
much watched retail sales figure was lower than expected for February,
edging higher by 0.1% versus the 0.3% consensus. The Dow fell by 1.4%
whilst the S&P 500 lost 1.1%. The Nasdaq eased by 0.6% .
Inflation within the Euro-Zone, as measured by the February CPI number,
came in at 1.8% annualised, whilst January Industrial production fell.
Meanwhile the Zew economic sentiment survey for March came in at 5.1%
versus the 4.5% expected. UK core PPI was higher than expected in
February at 2.7% annualised, whilst the countries trade balance improved
in January. The Swiss Central Bank raised interest rates for a sixth
time since late 2005 and Norway raised its benchmark rate by ¼% to 4%.
The UK’s FTSE 100 fell by 1.8%, whilst the French CAC 40 and the German
Dax dropped by 2.8% and 2% respectively.
Out East, Japan’s trade surplus widened in January as exports surged,
whilst industrial production in China accelerated during the first two
months of this year, with output rising by 18.5% versus the 14.7% of
December 2006. Retail sales in the country grew at the fastest pace in
over two years, whilst China’s trade surplus in February came in at 3
times economists’ expectations. Singapore’s unemployment rate fell to an
eight year low in 2006 at 2.7% and according to a Bloomberg article,
average wages in India are likely to jump by 14.5% this year. Over the
week the Nikkei fell by 2.5%, whilst the Hang Seng gave up 1%,
The $US index fell by 1.25% over the week to 83.2 whilst the Swiss Franc
gained 2.3%. US Treasuries were again a beneficiary of stock
uncertainty, as 5 and 10 year yields fell by 1.7% and 1%, ending the
week at 4.47% and 4.55% respectively
Within the commodities complex, the $crude oil price plunged by 7%,
despite lower than expected US inventories and upbeat comments out of
the OPEC meeting, ending the week at $57.4 a barrel, whilst the $Gold
price gained 0.3% to $654.
Next week sees the latest Inflation numbers out of the UK, whilst it’s a
4 day trading week for Japan due to a public holiday. January Euro-Zone
trade data is released and the closely watched US housing numbers will
be released. The main event though, will be the FOMC meeting of mid
week, where US interest rates are expected to remain on hold?
Freeport-McMoRan Copper & Gold Inc. sold $6 billion of bonds this week,
the second-biggest junk bond offering ever to finance a leveraged
buyout, whilst Global sales of collateralized debt obligations surged 90
percent in the first two months of this year as issuers rushed to
complete deals while the sub prime bond market was collapsing, according
to Bloomberg. Meanwhile Morgan Stanley said. CDO sales in January and
February totalled $80.8 billion, up from $42.6 billion in the same 2006
period. So perhaps the word “risk” is still being ignored after all?
“Early
to work and late to bed, is the inevitable
result of life in the red”
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