Week ending 6th February 2009   

US economic data released this week included a surprise boost to December pending home sales, mainly due to foreclosure “bargains” and the December personal spending and income numbers, which showed the former exceeding the latter. The main event was the January job losses, which jumped to 7.6%, up from December’s 7.2%, a 16 year high. The stock market shrugged off the 598,000 non farm job losses with the Dow jumping by over 200 points on the day and by 4% over the final two days of the week. The Dow rose by 3.5% over the week, whilst the S&P 500 and the Nasdaq gained 5% and 7.9% respectively.

Within the Euro-Zone, the ECB left interest on hold, at 2%, despite December PPI falling by a more than expected 1.3% annualised and retail sales for December also falling by 1.6% year on year. UK base rates were slashed by a further 0.5% to 1% as the latest consumer confidence data number fell to 40 from December’s 45. The FTSE 100 index gained 3.4%, whilst the French CAC and the German DAX were higher by 5% and 7% respectively.

Out East Japan’s largest carmakers, Toyota and Honda, led the 28% fall in vehicle sales in January, the worst fall in 35 years, whilst in Hong Kong home sales fell in January by 67% year on year and for the 7th straight month. The Nikkei rose by 1% whilst the Hang Seng gained 2.8%.

The $US index declined by 1.1% to 85.4, with another loser being the Japanese Yen, lower by 2.1%. Notable gainers were the SA Rand, higher by 6.6% and the $OZ and Kiwi, which gained 5.9% and 4.5% respectively. German 10-year bund yields rose by 7 bps to 3.37%, whilst Japanese 10-year “JGB” yields were also higher by 4 bps, ending the week at 1.33%. US Treasury 5 & 10 year yields rose once again, by 3.8% and 4.7% respectively, ending the week at 1.95%, and 2.98%.

Within the commodities complex the $crude oil price fell by 4% at $40 a barrel, whilst the price of $Gold eased by 1.7%, ending the week at $912oz.

Next week sees the latest vehicle sales for the Euro-Zone and advance Q408 GDP. The latest trade data is also due to be released for the US, the UK and for Japan. Japan also releases January consumer confidence numbers, whilst the US announce the latest retail sales.

US Treasury Secretary Tim Geithner unveils the latest stimulus plan on Monday, but if it’s like any of the other Government plans to stem the bearish tide, it may once again be a matter of “buy the rumour and sell the news.” An interesting week awaits us all.

“One's best success comes after their greatest disappointments”

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