US economic data released this week
showed that May vehicle sales held up well but employment data was dire,
as the May figure rose by 0.5% to 5.5%, the largest monthly rise in 22
years. Supporting this acceleration was the Challenger Gray job cuts
increase of 45% in May. The Dow fell by 3.5% over the week, with the S&P
500 and the Nasdaq ending lower by 2.7% and 1.4% respectively.
Euro-Zone PPI rose by 6.1 percent year on year in April, whilst the
regions retail sales for the same month fell by 0.6% versus the +0.2%
expected. Q108 GDP for the Euro-Zone came in as expected at 2.2%. The UK
is forecast to lose 15,000 jobs from the real estate sector as sales
have ground to a halt. Supporting these fears were the April lending
figures for both consumer credit and advances secured on dwellings, both
of which fell. Central Banks for both areas left interest rates on hold.
The FTSE 100 index lost 2.7%, fairing better than the French CAC and the
German DAX, which gave up 3.6% respectively.
Out East, Japan’s vehicle sales fell by 6.1% in May after April’s 6.9%
rise, whilst in Hong Kong retail sales jumped by 18.7% in April. The
Nikkei rose by 2.6% whilst the Hang Seng remained level.
On the currency front, the $US index fell by 0.9% to 72.4, whilst the
Swissie and the Euro gained 1.9% and 1.6%. German 10-year bund yields
dipped by 2 bps to 4.42%, whilst Japanese 10-year “JGB” yields added 3.5
bps to 1.785%. US 5 and 10 year Treasury yields over the week by 9.2%
and 5.6% respectively, ending the week at 3.41% and 4.05%.
Within the Commodities Complex the crude oil price jumped by a near 16%
over two days, ending the week at another record high, at $138.5 a
barrel a 9.4% gain. The price of Gold added 2% to end the week at
$899oz.
Next week will see the latest trade data for the US, the UK and for
Japan, and PPI and CPI statistics announced for the UK and the US
respectively. The Euro-Zone releases its unemployment numbers for Q108.
Central Banks put out the message this week that you shouldn’t expect
any more interest rate cuts in the near term. In fact, according to both
the Federal Reserve and the ECB Chairmen, you can expect rises to
contain the inflationary genie (the price of goods and services that
is.)
Your editor will be taking a well earned 2 week break after this, so the
next week ending will appear on the 30th June 2008.
“Knowledge is an unending adventure at the edge
of uncertainty.”
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