Week ending 6th April 2007   

US economic data continued on the soft side, excepting employment that is, where a robust March payroll number should put to rest any view of imminent Fed rate cuts. US unemployment fell to 4.4% versus 4.5% in February. Manufacturing activity fell in February as did the service sector, the latter representing some 90% of the economy. Vehicle sales also fell in March The holiday-shortened week, however, was generally good to U.S. stocks. The Dow and the S&P 500 gained 1.7% and 1.6% respectively, whilst the Nasdaq added 2%
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Euro-Zone PPI in February grew at 2.9%, the same as last week’s CPI number, whilst retail sales for the Zone in February were at 1.2% year on year. UK Q406 mortgage equity withdrawals rose to £14.6bn against £12.2bn in Q3, according to the Bank of England, as they left interest rates on hold at 5.25%.The UK’s FTSE 100 gained 1.4%, buoyed by continued bid talk, whilst the French CAC 40 rose by 1.9% and the German Dax jumped by 2.6%.

Out East, China, who last year imported 47% of its Oil requirement and where demand is increasing by 7% pa, has found reserves of about 2.2bn barrels, courtesy of PetroChina. Hong Kong’s retail sales in February rose at the fastest pace in more than 15 years and Japan’s Q106 Tankan survey came in as expected, albeit that vehicle sales contracted. Over the week the Nikkei rose by 1.1%, and the Hang Seng gained 2%,

The $US index eased by a further 0.4% to 82.67, whilst US Treasury yields rose over the week, thanks to the stronger US jobs data. The 5 and 10 year yields rose by 0.4% over the week.

Within the commodities complex, the $crude oil price fell by 2.5% to $64.2 a barrel, as the Iran/UK situation appeared to be resolved whilst the $Gold price gained 1.6%, ending the week at $674oz.

Next week sees the latest trade data for the US and the UK, whilst the Euro-zone’s Q406 final GDP number is announced The ECB meet up to decide on EU interest rates, as does the Bank of Japan. Inflation, as measured by the PPI figure for March, is also released for the US.

It was the Smoot-Hawley Tariff Act of 1930 which commenced the collapse of global trade and ushered in the depression. Now the Bush Administration has instructed the US commerce Secretary to impose preliminary duties of between 11 & 20% on paper imports from China to counter subsidies enjoyed by the manufacturers’ of these products. Aside of the “tit for tat” likely response from China, the US Commerce Dept will now face huge pressure from other US manufacturers’, who will also claim to have been unfairly harmed by cheap Chinese imports’. Protectionism is likely to spread.

“Hunger and anarchy is the result of the protectionist policy”

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