US consumer prices in June increased
by more than expected at 0.2% bringing the annual rate to 2.4%, whilst
June housing starts were higher than May’s, albeit that building permits
plunged by 100,000 to 1.4m. The Dow rose above the 14,000 nominal level
for the first time this week, before Friday’s jitters, on
disappointments from Microsoft, Google and Caterpillar produced a 0.4%
loss on the week at 13851, with the S&P 500 lower by 1.2% and the
NASDAQ, by 0.7%.
.
The British monsoon season continued to play havoc with the countries
transport system, just in time for the mass exit for family holidays. UK
inflation for June came in at 0.2%, bringing the annual rate to 2.4% and
slightly higher than expected, whilst June retail sales eased to
0.2%.Meanwhile June CPI for the Euro-Zone was as expected at 0.1% and
1.9% annualised, whilst the “Zone’s” trade balance for May fell to
Euro1.7BN The UK FTSE 100 fell by 2% over the week, with the French CAC
40 and the German Dax lower by 2.6% and 2.7% respectively.
Out East, Japan’s Tokyo condominium sales in June fell by 11% after the
17% fall in May whilst the countries June department store sales rose by
5.5% from a year earlier and at the fastest pace in 9 years. China’s
economy grew at the quickest pace in 12 years during Q207 at 11.9% so
policymakers responded by reducing the tax rate on savings and raising
interest rates, in a move to cool stock market speculation. Elsewhere,
Indonesia’s economy is set to grow at 6%+ over years to come on
increased consumer spending, according to the country’s President. The
Nikkei eased by 0.4%, whilst the Hang Seng gained 0.8%.
On the currency front, the $US index fell by 0.4% to a new 2007 low at
80.28, and the British Pound rose by 1.1%. A “flight to quality” from
stocks to Government Bond saw yields fall, with the German and Japanese
10 year yields falling to 4.44% and 1.88%, whilst US Treasury Bond 5 &
10 year yields fell by 3.2% and 3% respectively, ending the week at
4.85% and 4.96%.
Within the commodities complex, the $crude oil price climbed by a
further 2.2% over the week to $75.8 a barrel, whilst. $Gold gained 2.6%,
ending the week at $685oz
Next week sees Q207 GDP numbers for the US released and June home sales,
whilst the latest trade balance and CPI figures for Japan are due. The
Euro-Zone announces the latest money supply and current account data,
whilst the UK releases more on house prices and industrial trends.
The “sub-prime” woes of late have made lenders of all stripes do
something that has been absent for many years, which is to “assess risk
correctly”. The fuel for the continued mega mergers and/or
acquisitions, DEBT, is drying up fast, whilst the psychology of
borrowers and lenders alike is turning from a mood of ultra optimism to
that of worry/fear. A very interesting period lies ahead.
“Man was lost if he went to a usurer, for the
interest ran faster than a tiger upon him”
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