US economic data reported this week
included the March trade deficit, which narrowed to $58.2BN from
February’s $62.3BN.March consumer credit surged to $15BN from just $5BN
in the month before and pending home sales in March, as expected, fell
by 1%. Insurance heavyweight AIG and tech bellweather, Google,
disappointed the market, with the Dow lower by 2.4% over the week and
the S&P 500 by 1.8%.The Nasdaq fell by 1.3%.
European retail sales in March fell by 1.6%, the most since 1995 and
twice as much as economists’ expected, although German car sales,
particularly low emission vehicles, saw their highest level in April in
eight years. The ECB and the UK’s central bank left interest rates on
hold, at 4% and 5% respectively, with consumer confidence in the UK
falling to 70 in April from the 77 number seen in March. The FTSE 100
index eased by 0.2%, whilst the French CAC and the German DAX fell 2.2%
and 0.6% respectively.
Out East, consumer prices in Australia climbed to 4.3% from a year
earlier, the fastest inflation in 17 years and according to China
Knowledge, residential land prices in Beijing are growing at 22% year on
year.Elsewhere,Japan’s March provisional confidence index came in as
expected and lower than in February The Nikkei gave up 2.8% and the Hang
Seng fell by 4.5%.
On the currency front, the $US index declined by 0.7% to 73 after last
week’s 1% rise, with the Japanese Yen gaining 1.9% and the Swiss Franc
1.1%. On the weaker side were the British Pound, off by 1% and the South
African Rand, which fell by 2.2%. German 10 year bond yields fell by
20bps to 3.99% whilst Japanese JGB yields eased by 9bps to 1.55%. As
stocks stumbled, US Treasuries saw lower yields in the 5 and the 10 year
by 6.3%, to 2.03% respectively, ending the week at 2.96% and 3.77%.
Within the Commodities Complex the crude oil price jumped by 8.3% ending
the week at another record high of $126 a barrel, whilst the price of
Gold added 3.2% to $886oz.
Next week will see the latest inflation data out of the US, the UK and
the Euro-Zone, with Q108 advance GDP numbers for the latter and April
advance retail sales for America.
Soothing sounds have emanated from the mouths of the Bank of England
Governor, the Fed Chairman (and even his predecessor, slick ‘Al),
joining those of US Treasury Secretary Paulson, in stating that the
worst of the credit crunch has passed. Meanwhile in the brief 5 week
period since Bears Stearns blew up, US home foreclosure filings have
totalled 259,000, or on average 7000 per day. The UK equivalent,
repossession rates, are at one-third of the level seen in the early
1990s downturn and rising fast.
“Repetition does not transform a lie into a
truth”
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