The US economic data released this
week was mixed, as July pending home sales rose by 3.2% and by 12.9%
year on year, whilst August vehicle sales came in at a better than
expected 10.s million units. Unemployment in August disappointed,
however, rising to 9.7% versus the 9.5% expected and the prior month’s
9.4% and is now at a 25 year high. The Dow and the S&P 500 ended the
week lower by 1% and 1.2% respectively, whilst the Nasdaq eased by 0.5%.
Official unemployment in the Euro-Zone in July was put at 9.5%, a 10
year high, whilst retail sales in July fell by 0.2%. The ECB left
interest rates on hold, at 1%. Meanwhile UK consumers repaid £0.2BN of
debt in July, the most on record and net lending on dwellings also fell
by £0.4BN. The FTSE 100 index fell by 1.1%, whilst the French CAC and
the German DAX gave up 2.5% respectively.
Out East, it was all change in Japan as the Democrat Party snatched
power from the LDP after 50 years of LDP reign. DPJ leader, Yukio
Hatoyama, was greeted with disappointing economic statistics during his
first week, as July housing starts fell by 32.1% year on year and August
vehicle production dropped by an annualised 31.9%. There was better news
for India and for OZ, as Q209 GDP came in at 6.1% and 0.6% respectively.
The Nikkei fell by 3.3% and the Hang Seng gained 1.1%.
The $US index eased by 0.3% to 78.14 with gainers including the $OZ,
higher by 1.2% and the British pound, which managed a 0.8% rise. Within
the Sovereign debt markets, German bund yields eased by 1 bps to 3.24%,
whilst Japanese and UK 10-year yields were higher by 1bps, and 7bps,
ending the week at 1.32% and 3.62% respectively. The US Treasury 5 and
10 year yield were lower by 4.4% and 0.3%, ending it at 2.36% and 3.44%.
Within the commodities complex the $crude oil price fell by 6.5% to $68
a barrel, whilst the price of $Gold jumped by 4%, ending the week at
$994oz.
Next week sees trade data for the US and Japan, with the latter also
announcing Q209 GDP and August bankruptcies. In a shortened trading week
for the US, due to the Labour Day holiday on Monday. July consumer
credit figures are released, as are September consumer confidence
numbers. Investor confidence is due for the Euro-Zone, whereas for the
UK we will receive August retail sales, consumer confidence and PPI
numbers plus any interest rate change from the Bank of England MPC
meeting.
As the Group of 20 Finance Ministers gathered in London for a two day
meeting, US Treasury Secretary, Timothy Geithner, followed the recent
Bernanke statement in claiming that they had been ‘very successful’ in
helping to end the global recession. He cautioned that it’s too early to
remove policies aimed at boosting growth, saying, "You’re seeing the
first signs of positive growth now in this country and countries around
the world… We’ve come a very long way but I think we have to be
realistic, we’ve got a long way to go still.”
“He
who is humble is confident and wise. He who
brags is insecure and lacking”
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