It was a bright week for US economic
data, as new home sales in June jumped by 11%, their largest gain in
eight years and the May S&P/Case Shiller home price index rose by 0.5%,
the first rise in 3 years. The aforementioned advance GDP number for
Q209 added to the joy, although durable goods orders for June were at a
worse than expected -2.5%.The Dow and the S&P 500 rose by 0.8% each and
the Nasdaq added 0.6%. Stocks have enjoyed their best month rally since
2002.
Euro-Zone consumer and economic confidence for July were better than
forecast, whilst CPI for the zone came in at a worse than expected -0.6%
annualised rate, the lowest in 13 years Further gloom was seen from the
latest EU unemployment data, which is now at an official 9.4%, with
Spain at 18.1%. Meanwhile, UK house prices enjoyed their 3rd consecutive
month of gain, in July, rising by 1.5%, albeit that both consumer credit
and net lending on dwellings for June were below expectations. The FTSE
100 index gained 0.7% over the week, whilst the French CAC and the
German DAX were higher by 1.8% and 2% respectively.
Out East, Japan’s retail sales in June fell for the 10th consecutive
month, as the Country’s unemployment rate jumped to a six year high, at
5.4%, from the prior 5.2% and CPI is at -1.8% year on year in June.
Elsewhere, new mortgage loans in Hong Kong soared to $US5BN in June and
higher by a third in a month The Nikkei jumped by 4.2%, whilst the Hang
Seng gained 3%.
The $US index declined by 0.6% to 78.3, despite US officials reassuring
their Chinese counterparts of their commitment to a strong Dollar
policy. Notable gainers included the $OZ, up by 2.2%, and the British
Pound, which jumped by 1.7% to 1.67$/£. Sovereign debt yields were mixed
this week, with the German and the UK 10 year lower by 18bps and 16bps
respectively, ending it at 3.3% and 3.8%, whilst the Japanese JGB yield
added 3bps to 1.41%. The US Treasury 5 and 10 year yield fell by 0.6% to
4.6%, ending the week at 2.53% and 3.5%.
Within the commodities complex, the $crude oil price jumped by 2% to
$69.5 a barrel, whilst the $Gold price added 0.27%, ending the week at
$954oz.
Next week sees the latest on vehicle sales from the US and Japan, with
the former also reporting on employment, consumer credit and personal
incomes and spending. The UK also issues the latest consumer confidence
data plus July PPI numbers, whilst the PPI is also seen for the
Euro-Zone, together with retail sales for the region. On Central Bank
watch will be the BOE MPC and the ECB, as they announce any change in
interest rate policy.
As an “antidote” to the positive “official” thoughts alluded to in the
opening paragraph, we are interested to note that the rate of corporate
earnings collapse, in this economic contraction so far, has outstripped
the rate for every preceding recession going back 100 years and that the
contraction is more severe than at the start of 1929.
“Trust yourself. You know more than you think
you do.”
[ Up ] [ Next ]
