US economic data released during this
holiday shortened week included January housing starts, which plunged by
17% and were down by 55% on the same month last year. Inflation stats
for January, as measured by the PPI and the CPI, were better than
expected at -1% and 0% annualised. Obama pledged $275BN to a programme
that he suggests will cut mortgage payments for 9m struggling home
owners. The Dow fell by 6.2% over the week, with the S&P 500 and the
Nasdaq lower by 6.9% and 6% respectively.
The Euro-Zone’s trade balance was better than forecast in December,
albeit that it was still the worse since the Euro introduction 10 years
ago, and the ZEW survey of economic sentiment for the same month
improved by more than analysts expectations. For the UK, the public
finances in January were worse than expected but January retail sales
exceeded forecasts, by rising by 0.7%. The FTSE 100 index lost 7.2%,
whilst the French CAC and the German DAX were down by 8.25% and 9%
respectively.
Out East Japan’s Q408 GDP figures were worse than even the dire forecast
of -10% annualised, coming in at -12.7%, the worse since 1974.Elsewhere,
Singapore exports fell by 35% year on year, the worst in 22 years. The
Nikkei fell by 4.7% whilst the Hang Seng dropped by 6.3%.
The $US index rose by 0.5% to 86.5, in what was a volatile week for
currencies. Other risers were the British Pound and the Swiss Franc,
higher by 0.5% and 0.3%, whilst fallers included the Yen, lower by 1.5%
and the $Singapore, which fell by 1.4%. German 10-year bund yields fell
by 9 bps to 3.01%, whilst Japanese 10-year “JGB” yields rose by 2 bps,
ending the week at 1.275%. US Treasury 5 & 10 year yields fell by 3.5%
and 3.8% respectively, ending the week at 1.8%, and 2.77%.
Within the commodities complex the $crude oil price gave up 4.6% at $40
a barrel, whilst the price of $Gold rose by 6.4%, ending the week at
$1002oz, its third move over the $1000 mark in history.
Next week sees the latest house price data for the US and the UK, with
consumer confidence numbers also due for the US and for the Euro-Zone.
Unemployment figures for January are announced for Japan. CPI data is
also due for release for both Japan and for the Euro-Zone.
The markets were “spooked” once again this week, over worries about the
banking sector. Last week it was worries that the UK Lloyds banking
group and HBOS would go into full government ownership, whereas this
week the German authorities moved to nationalise the Hypo banking group
and the US appear to be on the brink of taking control of Citigroup and
the Bank of America.
“There’s a way of transferring funds that is
even faster than electronic banking, its called
marriage”
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