US economic data released this week
included an improved trade deficit in June, at -$US27BN and an FOMC
decision to leave interest rates at 0.25%.Q209 non farm productivity
jumped by a better than expected 6.4%, but a “look under the bonnet”
notes that unit labour costs fell by 5.8% versus the 2.5% expected.
“Green shoot” believers will be disappointed to see that July CPI came
in at -2.1% annualised and that July advance retail sales, less autos,
fell by 0.6%, more than analyst expectations. Four weeks of stock market
gains came to a halt this week, as the Dow and the S&P 500 fell by 0.5%
and 0.6% respectively, whilst the Nasdaq ended lower by 0.7%.
Euro-Zone Q209 GDP came in at a better than expected -0.1% and -4.6%
annualised, with officials from Germany & France quick to point out that
“their” recessions had ended. The French finance minister failed to
mention that the French budget deficit had more than doubled in H109 to
7% of GDP. CPI for the “zone” fell by 0.7% in July whilst industrial
production for the same month fell by a more than forecast 17% year on
year. UK unemployment rose by 220,000 to 2.43m in Q209, which at 7.8% is
the highest level in 14 years. The FTSE 100 index fell by 0.4% over the
week, whilst the French CAC and the German DAX were lower by 0.7% and
2.7% respectively.
Out East, the Japanese trade surplus for June improved, as did consumer
confidence in July. Elsewhere South Korea’s unemployment rate fell in
July to 3.8% versus the prior month’s 4%, whilst cellular phone
penetration in China has risen to 240m users according to the minister
of industry and information technology. The Nikkei ended higher by 1.8%,
whilst the Hang Seng rose by 2.5%.
The $US index declined this week by 0.2% to 78.8 despite the Friday
rally. Notable gainers included the Japanese Yen, higher by 2.9% whereas
fallers included the $Canadian, lower by 1.6%. Sovereign debt yields
fell this week, with the German and Japanese JGB yields lower by 19bps
and 5.5bps respectively, ending it at 3.32% and 1.38%, whilst the UK 10
year eased by 13bps, at 3.68%. The US Treasury 5 and 10 year yield fell
by 11.6% and 7.7% respectively, ending the week at 2.5% and 3.56%.
Within the commodities complex, the $crude oil price gave up 1.9% to
$69.6 a barrel, whilst the $Gold price eased by 0.7%, ending the week at
$949oz.
Next week sees trade data for the Euro-Zone and the latest inflation
data for both the US and for the UK. Housing starts and existing home
sales for July are also due out for the US plus UK July retail sales,
whilst Q209 GDP and nationwide department store sales for July will be
announced for Japan.
According to RealtyTrac there were new monthly records of 360,149 US
properties that were either seized or received a default or auction
notice in July. That is 1 in 355 households which had a filing, the
highest monthly rate on record, with foreclosures running at six times
higher than four years ago.
“If
you think nobody cares if you’re alive, try
missing a couple of mortgage payments”
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