US pending home sales in June
surprised on the upside, jumping by 5.3% versus the -1% predicted.
Consumer credit also jumped in June, at $14.3BN against May’s $7.8BN
whilst personal income rose by 0.1% as spending increased by 0.6% and
the FOMC left interest rates at 2%.The Challenger job cuts survey came
in at a massive 140% increase for July against the 45% rise in June. The
World’s largest insurer, AIG, also suffered a $5.56BN loss in Q208, its
3rd consecutive loss, but this and the aforementioned GSE losses did not
deter investors. The main stock indices had their best week since April,
albeit increased volatility that saw 2 days of +300point gains and 1
losing day of over 200 points. The Dow jumped by 3.6%, whilst the S&P
500 was higher by 2.9% and the Nasdaq soared by 4.5%.
Euro-Zone interest rates were also left on hold, at 4.25%, despite the
region’s PPI increasing to 8% year on year in June versus the 7.1% in
May. No doubt the ECB were more concerned over the EZ retail sales for
June, which fell by 3.1% year on year. The UK’s Central Bank left their
rate on hold, at 5%, as the nationwide consumer confidence survey
collapsed to 51 versus the expected 57 and June’s 61 reading. The FTSE
100 index gained 2.5%, whilst the French CAC and German DAX rose by 4.1%
and 2.6% respectively.
Out East, Japan’s bankruptcies climbed to the highest level in five
years last month, whilst in China the 29th Olympic Games commenced, at
8.08 pm on the 8/8/08, with a stunning opening ceremony, attended by
more than 50 Presidents and prime ministers. Ironically the Shanghai
Composite fell a near 8% over the week. Elsewhere, as inflation remained
rampant, Indonesia and Korea hiked interest rates to 9% and 5.25%
respectively. The Nikkei rose by 0.6% whilst the Hang Seng fell by 4.3%.
Volatility was also evident on the currency front, as the $US index
soared by 3.3% to 75.85, whilst the Euro and Swiss Franc fell by 3.7%
and 3.1% respectively. German 10-year bund yields slipped by 9 bps to
4.26%, whilst Japanese 10-year “JGB” yields were lower by 4 bps, ending
the week at 1.47%.It was a quieter week for US Treasury’s as the 5 year
yield eased by 0.3% to 3.2% whilst the 10 year yield remained level,
ending the week at 3.95%.
Within the Commodities Complex the crude oil price collapsed by 7.9% to
$115 a barrel whilst the price of Gold gave fell by 5.7%, ending the
week at $865oz.
Next week is all about inflation and trade balances as the latest on
both are due out for the US, the UK and the wider Euro-Zone. The US also
releases the advance retail sales data for August, whilst Japan
announces Q208 provisional GDP figures.
After the recent collapse of Indybank, not to mention the rising
concerns over the two GSE’s, Fannie & Freddie, one shouldn’t be to
surprised that Americans are reducing the amount on deposit with any one
bank, preferring to hold less than the FDIC guarantee on bank deposits
of up to $100,000. Perhaps they should also be aware that the Federal
Deposit Insurance Corporation has $52.8BN in “reserves” to cover 8471
banking institutions that have $8,575 Trillion of deposits. This
“reserve” equates to 0.62%.
“Disillusion comes only to the illusioned. One
cannot be disillusioned of what one never put
faith in.”
[ Back ] [ Up ] [ Next ]
