US economic data released this week
included the S&P/Case Shiller home prices for June and for Q209,
surprising on the upside, together with July new home sales which also
exceeded analyst forecasts. August consumer confidence and July durable
goods orders were also higher than predictions, whilst Q209 GDP
contracted by less than expected. The Dow and the S&P 500 edged higher
by 0.4% and 0.3% respectively, whilst the Nasdaq managed to rise by
0.4%.
Euro-Zone economic and consumer confidence in August was higher than
forecast, albeit that the numbers remain negative but at least
industrial new orders for June exceeded expectations. UK house prices
rose in August by 1.6%, the 4th consecutive month according to the
Nationwide but according to official statistics there are now 20% of UK
households where nobody works, despite being of working age. The FTSE
100 index rallied by 1.2% over the week, whilst the French CAC and the
German DAX were higher by 2.1% and 1% respectively.
Out East, on the eve of the Countries general election, Japan’s
unemployment rate hit a record high in July, at 5.7% versus the previous
record of 5.5% in April 2003, having soared by 40% over the past year.
This no doubt explains why consumer spending has declined by 2% year on
year and why inflation remains negative. Elsewhere the Chinese
authorities are reigning in the credit expansion of the past year as
economic growth is forecast at 10%. The Nikkei managed to gain 2.9%,
whilst the Hang Seng fell by 0.5%.
The $US index gained 0.3% to 78.3 with other gainers including the $OZ,
higher by 0.8%, the same as the Yen. Sovereign debt yields fell for the
3rd consecutive week, with the exception of Japanese JGB yields which
were unchanged at 1.305%. UK and German 10 year yields declined by 8bps
and 6bps respectively, ending the week at 3.55% and 3.25%. US Treasury
yields also fell with the 5 and 10 year falling by 3.7% and 3%,
finishing the week at 2.46% and 3.45%.
Within the commodities complex, the $crude oil price slipped by 1.6% to
$72.7a barrel, whilst the $Gold price rose by 0.2%, ending the week at
$956oz.
Next week sees the latest unemployment data for the US and for the
Euro-Zone and more on housing for the US and the UK. Euro-Zone Q209 GDP,
July PPI and retail sales numbers are due for release, together with any
interest change by the ECB, whilst the latest construction and retail
sales information is expected from Japan.
So ends another week, with another three US bank failures, which brings
the year to date total to 84 amid the economic downturn and rising loan
defaults. The number of banks on the FDIC's confidential "problem list"
jumped to 416 at the end of June from 305 in the first quarter. That's
the highest number since June 1994, during the savings-and-loan crisis.
“Bank
failures are caused by depositors who don’t
deposit enough money to cover losses due to
mismanagement”
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