US CPI in June came in at 0.7%, higher
than expected and annualised is lower by 1.4%, whilst PPI for the same
month was -5.2% year on year. Advance retail sales for June were 0.7%,
better than forecast, but foreclosure filings for H109 hit a record, as
1.5m properties received a default or auction notice, according to
realtytrac.com. Stocks, however, enjoyed one of their best weeks since
early March, as the Dow jumped by 7.3% whilst the S&P 500 and the Nasdaq
climbed by 7% and 7.4% respectively.
Euro-Zone car sales rose in June, the first rise in 14 months, and CPI
for the region, fell by 0.1% annualised in June. UK CPI came in at 1.8%
year on year whilst unemployment rose to the most in 14 years in June
and the biggest quarterly jump since records began in 1971. The FTSE 100
index gained 6.3% over the week, whilst the French CAC and the German
DAX were higher by 7.9% and 8.8% respectively.
Out East, Japan’s new condo sales in June fell by 23% and machine tool
orders collapsed by 73%, Meanwhile, China has overtaken Japan to become
the World’s second largest stock market by capitalisation, now at
$3200BN. The Nikkei rose by 1.2%, whilst the Hang Seng leapt by 6.2%.
The $US index declined by 0.9% to 79.5. Notable gainers included the
$Canadian, up by 4.2%, and the $OZ, which was higher by 3%, whilst on
the downside the Yen lost 1.8%. Sovereign debt yields jumped this week,
with the German, Japanese and the UK 10 year higher by 14,2 and 7bps,
ending it at 3.4%, 1.32% and 3.81% respectively. The US Treasury 5 yield
soared by 13.7% to 2.5% whilst the 10 year yield added 10.8%, ending the
week at 3.65%.
Within the commodities complex, the $crude oil price jumped by 7.8% to
$64.6 a barrel, whilst the $Gold price added 2.7%, ending the week at
$937oz. The CRB commodities index surged by 6.3% and is now higher by
23.2% year to date.
Next week is a fairly light one for economic data, but it will include
the latest consumer confidence survey and existing home sales for the US
and June department store sales for Japan. For the Euro-Zone we’ll see
Industrial new orders, whilst for the UK Q”09 advance GDP is announced,
together with June retail sales and June monetary numbers.
CIT Group Inc, the 101 year old company who is amongst the largest
lenders to small and medium sized US businesses, is on the brink of
bankruptcy as the Obama administration appears to have decided that its
failure would not be a threat to the system. This “to small for
support,” decision may come back to haunt the President as the 1m firms
financed by CIT are the main stay of productive employment within the
US.
“If
you stand on credit, you will fall on debt”
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