In a holiday shortened week for the
US, economic data released included the September consumer confidence
index, as measured by the University of Michigan, which came in at 70.2
versus the 67.2 expected and last month’s 65.7. The July trade deficit
widened by more than forecast, at $32BN, against the -$27BN seen in
June. American consumer credit fell by a record $21.6BN in July, down
4.2% year on year and was the largest annualised decline since 1944. The
Dow and the S&P 500 ended the week higher by 1.7% and 2.7% respectively,
whilst the Nasdaq gained 3%.
It was a very light week for European economic statistics, but it did
show a fall in the September sentix investor confidence index against
expectations. Meanwhile UK interest rates were left on hold, at 0.5%, by
the Bank of England MPC, despite August PPI numbers coming in at a
higher than forecast 2.2%. UK consumer confidence ticked higher in
August, whilst the trade deficit for July widened by more than
expectations. The FTSE 100 index gained 3.3%, whilst the French CAC and
the German DAX jumped by 3.8% and 4.5% respectively.
Out East, Japan’s trade surplus fell by more than forecast in July, as
did Q209 GDP, which fell to 2.3% annualised versus the previous
quarter’s 3.7%. Meanwhile, China’s passenger car sales surged by a
record 90% in August, outpacing India, which itself saw a credible 26%
jump in car sales from a year earlier. The Nikkei rose by 2.5% and the
Hang Seng gained 4.1%.
The $US index fell by 1.9% to 76.7, with only the Argentina Peso and the
Turkish Lira falling against it. Gainers included the $Kiwi, higher by
2.7% and the Japanese Yen, which managed a 2.6% rise. Within the
Sovereign debt markets, German bund yields eased by 1 bps to 3.23%,
whilst Japanese and UK 10-year yields were lower by 2bps, and 1bps,
ending the week at 1.3% and 3.61% respectively. US Treasury 5 and 10
year yields were lower by 2.9% each, ending the week at 2.29% and 3.34%.
Within the commodities complex the $crude oil price rose by 2.5% to
$69.7 a barrel, whilst the price of $Gold gained a further 1.2%, ending
the week at $1006oz, the highest $US spot future close in the history of
Gold.
Next week sees inflation data, in the guise of CPI, for the US, the UK
and for the Euro-zone. August retail sales and housing starts are also
due for release in the US, with retail sales data, unemployment numbers
and public finances due for release in the UK. Out East, we will get to
see the latest department store sales and industrial production figures
for Japan, whilst back in the EU, the July trade balance and August car
registrations data will be announced.
Stock investors are still “buying into the green shoots euphoria,”
encouraged by Politicians of all stripes and financial gurus’, who are
pointing to a rising $Oil and $Gold price as a sign of success, via the
bailout packages, and that inflation is on the rise. Against this are
bond yields, which still wish to head lower, not to mention the growing
repayment of debt as witnessed within the UK and the US. Except
Government that is!
“Perhaps
our eyes need to be washed by our tears once in
a while, so that we can see life with a clearer
view again”
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