US economic news this week wasn’t that
good, as the trade deficit for May widened by 2.3% to $60BN and consumer
credit for the same month jumped to $12.9BN from April’s $2.3BN.One
bright spot was the provisional July University of Michigan consumer
confidence index, which was put at 92.4 versus June’s 86 but import
prices in June jumped by 1% and advance retail sales for the same month
fell by 0.9%, the steepest fall in two years. Stocks had a volatile week
but the Dow gained 2.2% and the S&P 500 1.4%. The NASDAQ, meanwhile rose
by 1.5%.
.
Euro-Zone Q107 forecast GDP was at 3.1% versus the 3% estimate and at
the fastest pace since the year 2000, albeit that the region’s
Industrial Production eased to 2.5% in May from April’s 2.9%.UK producer
prices for June were as expected at 2.1% annualised, whilst the May
trade balance improved slightly to -£6.3BN. The UK FTSE 100 rose by
0.4%, whilst the French CAC 40 and the German Dax were higher by 0.3%
and 0.6% respectively.
Out East, Japan’s wholesale inflation accelerated in June as oil and
other commodity prices rose whilst the Countries Industrial Production
jumped by 3.8% in May China’s GDP for 2006 was revised higher to a
blistering rate of 11.1%, the highest in 12 years whilst Singapore’s
q207 growth came in at 12.8%, up from the revised Q107 rate of 8.5%. The
Nikkei managed a 0.5% gain over the week, whilst the Hang Seng jumped by
a further 2.5% after last week’s 3.5%.
On the currency front, the $US index fell by 1.1% to a 2007 low at 80.6,
whilst the Thai Baht jumped by 3%. Government Bond yields eased after
their recent climb, with the German 5 year and Japanese 10 year falling
to 4.62% and 1.92%.US Treasury Bond 5 & 10 year yields fell by 1.73%
respectively, ending the week at 5.01% and 5.1%.
Within the commodities complex, the $crude oil price continued its climb
of late, rising by 1.8% over the week to $74 a barrel. Iran, Japan’s
third largest supplier of crude oil has stated that it wants all future
payments for its Oil to be made in Yen as opposed to Dollars. $Gold
gained 1.9%, ending the week at $667oz
Next week is a big week for “inflation data”, as the latest CPI numbers
are released for the US, the Euro-Zone and the UK. Minutes of the 28th
June FOMC meeting are due out, as are the latest US housing starts and
building permits.
According to RealtyTrac, mortgage foreclosures in the U.S. jumped to a
record in the first half of this year as 926,000 foreclosure notices
were filed, 56% more than a year earlier. Foreclosures were the highest
last month in California and Florida, where some home prices have fallen
by as much as 25%. Meanwhile, within the $US10 Trillion of asset backed
bonds’, lies the $800 billion market for American sub-prime loans, which
is faltering as traders are belatedly acknowledging that what they see
isn’t what they get. As delinquencies on home loans to people with poor
or meagre credit surged to a 10-year high this year, no one buying,
selling or rating the bonds collateralized by these bad debts bothered
to quantify the losses. Now the bubble is bursting and there is no
agreement on how much money has vanished so far. It’s $52 billion,
according to an estimate from Credit Suisse and $90 billion according to
Deutsche Bank AG.”
“Lying rides upon debt’s back”
[ Back ] [ Up ] [ Next ]
