Week ending 31st August 2007   

For the US, the latest house data showed price falls in Q207 at 3.2% lower than a year ago, which is the largest year-over-year decline since January 1995. Inventory levels now stand at 9.6 months of supply and 11 months for Condos, although July existing home sales were a little better than expected.Q207 provisional GDP came in at 4% versus the anticipated 4.1% and July PCE, the Fed’s most watched inflation indicator, was 1.9% against the expected 2%, boosting hopes of an early interest cut by the FOMC. Despite large swings once more for stocks, the Dow ended a modest 0.2% lower and the S&P 500 eased by 0.4%. The Nasdaq gained ¾%.
Euro-Zone money supply in July was running at 11.7% year on year versus an expected 10.9% and August CPI was confirmed at 1.8%.Unemployment for the zone in July was stated to be 6.9%. Meanwhile for the UK, average house prices were higher by 9.6% annualised in August, slightly lower than July’s 9.9% and July UK money supply expanded at 13% European investors’ took heart from the “Ben & George show” pushing stocks higher. The UK’s FTSE 100 index rose by 1.3%, whilst the French CAC and German Dax both gained 1.7% over the week.

Out East, Japan’s latest CPI number came in at -0.5%, prompting fears that deflation was returning (if it ever went away?) July industrial production for Japan increased by 3.2% whereas July vehicle sales plunged by 10.5%. China’s Finance Minister Jin Renqing resigned for ‘personal reasons,’ the State Council said, after newspapers reported that the 63-year-old had been accused of improper conduct.. The Nikkei gained 2%, whilst the Hang Seng jumped by 4.6%.

On the currency front, the $US index rose by a modest 0.2% to 80.8, whilst German 10-year bund yields dipped 2 bps to 4.24% and Japanese 10-year “JGB” yields added one basis point to 1.60% For US Treasury’s, the 5 and 10 year yield fell by 4.25% and 2% respectively, ending the week at 4.25% and 4.54%.

Within the commodities complex, the $crude oil price, gained 4.2% to $74 a barrel, whilst the. $Gold price rose by 0.7%, ending the week at $673oz

Next week sees release of July pending home sales and the latest jobs data for the US, in a holiday shortened trading week. Q207 provisional GDP data and July PPI are due out for the Euro-Zone, with policy meetings for the ECB and the UK’s MPC. The latest leading economic indicators for Japan will also be announced.
.
It was a volatile week with the US major stock indexes ending higher in pre-holiday trading. Two 245+ point daily closing swings for the Dow during the week kept investors on their toes. On three of the five days there was 90% up or down volume days, which is extreme and despite this week’s gain, 3 out of the 5 days saw more downside breadth than upside. There are tremendous cross-currents blowing through the market and despite the show by the Commander in Chief and the Federal Reserve Boss more volatility is assured.

“To follow by faith alone is to follow blindly”

[ Back ] [ Up ] [ Next ]