US housing data released this week, in
the guise of March new home sales, painted a bleak picture, as the 8.5%
fall was the worst on record since the early 1990s housing recession,
leaving builders with the largest backlog of unsold homes, at 11 months
of inventory, since 1981.March durable goods orders fell by 0.3%, worse
than analysts expected whilst the latest University of Michigan consumer
confidence number added to the uncertainty. Despite a triple digit fall
on Tuesday, the Dow managed a modest 0.3% gain over the week, with the
S&P 500 higher by 0.5%, and the Nasdaq ahead by 0.8%.
The Euro-Zone money supply growth slowed for a second month in March, to
10.3%, lower than February’s 11.3% and less than analysts' expectations.
UK mortgage approvals in March fell by nearly a half from a year
earlier, to their lowest level in 11 years, and down by 18% from
February’s figure. March UK retail sales fell by 0.4% whilst the
Government’s PSBR blew out to £10.2BN versus the £2.7BN number seen in
February. The FTSE 100 index gained 0.6%, whilst the French CAC and the
German DAX rose by 0.3% and 0.8% respectively.
Out East, Singapore’s inflation rate accelerated in March, annualising
at 6.7%, a 26 year high, whilst in Japan consumer prices rose at the
fastest pace in a decade, at 1.2% annualised. The Nikkei rose by 2.9%
with the Hang Seng gaining 5.5%.
On the currency front, the $US index rallied by 1.1% to 72.79, with one
of the stronger currencies this week being the South African Rand, which
gained 2.2%, whilst on the weaker side were the Swiss Franc, off by 2.5%
and the Euro, which fell by 1.8%. German 10 year bond yields rose by
4bps to 4.18% whilst Japanese JGB yields surged by 22bps to 1.6% on
inflation data. The US 5 year Treasury yield jumped by a further 7.7%,
after last weeks massive 14.5%%, ending the week at 3.18%, whilst the 10
year yield gained 3.3% to 3.87%.
Within the Commodities Complex the crude oil price gained another 2%
ending the week at $118.5 a barrel, whilst the price of Gold fell by
2.8% to $890oz.
Next week sees the latest on US home prices, as the S&P/CaseShiller
February data is released, along with more consumer confidence insight
and the April unemployment rate. The Euro-Zone announce April retail
sales and estimated CPI numbers, whilst the UK releases the latest
consumer credit and net borrowing on dwellings. Japanese unemployment,
household spending and housing starts for March are also due to be
announced. The main announcement awaited, however, will be the FOMC on
US interest rates, due out on the 30th April.
Despite the grim housing data stretching from the US to the UK, Spain
and on to New Zealand, not to mention the ever growing bad debt write
downs from the finance community (now set to top $1Trllion according to
Goldman Sachs), investor complacency, as measured by the VIX (the CBOE
Volatility Index) remains high as all of the recent bad news is being
treated as a positive. Perhaps this suggests that we should watch out
for good news.
“Before borrowing money from a friend, decide
which you need most”
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