US, economic data released this week
was mainly upbeat, with inflation, as measured by the August PPI & CPI
coming in at a better than forecast 0.2% and 0.1%. Retail sales for the
same month was also better than expected, at 2.7%, albeit that if you
strip out autos, it was a more mundane 0.6%. Fed Chair, Bernanke, also
provided cheer as he all but declared the recession over. The Dow rose
by 2.2%, whilst the S&P 500 and he Nasdaq ended the week higher by 2.5%
respectively.
Euro-Zone CPI for August was 0.3%, as expected, whilst the region’s
trade surplus was at a higher than forecast E12.6BN. Q209 employment for
the zone fell by 0.5% versus the prior quarter fall of 0.8%. The UK’s 3
month unemployment rate for July ticked higher to 7.9% and retail sales
were flat in August, at 2.1% annualised versus the prior 3.3%. August
CPI for the UK was at 0.4% and 1.6% year on year, higher than expected.
The FTSE 100 index gained 3.2%, whilst the French CAC and the German DAX
rose by 2.5% and 1.4% respectively.
Out East, Hong Kong’s property roller coaster continues, as a 1 bedroom
apartment in the Kowloon district sold for $US3,874 a square foot,
whilst Sun Hung Kai Properties Ltd raised the price of two penthouses by
50%, to $US39m each, or a record $9700 per square foot. Elsewhere the
Bank of Japan left rates on hold at 0.10%. The Nikkei fell by 0.7% and
the Hang Seng gained 2.2%.
The $US index slipped by 0.25% to 76.5, outdone by the Pound, which fell
by 2.4%. The gainers were led by Scandinavia, where the Swedish Krona
gained 2% and the Norwegian Krone rose by 1.4%. Sovereign debt yields
moved higher again, with German bund yields up by 14 bps to 3.37%,
whilst Japanese and UK 10-year yields were higher by 4bps, and 13bps,
ending the week at 1.34% and 3.74% respectively. US Treasury 5 and 10
year yields jumped by 7.5% and 3.9%, ending the week at 2.46% and 3.47%.
Within the commodities complex the $crude oil price jumped by 4% to
$72.5 a barrel, whilst the price of $Gold gained 0.14%, ending the week
at $1007oz.
Next week sees the latest housing data for the US, the UK with August
durable goods orders also due out for the US. Euro-Zone industrial new
orders for July will be released, as will August M3 money supply
numbers. The August trade balance for Japan is also due and the FOMC
meeting will decide on any policy change for US interest rates.
Returning to those “historical similarities,” mentioned in the opening
paragraph, we are interested to recall the “”Smoot-Hawley” tariff act,
signed into law in 1930 by President Hoover, which lifted the price of
thousands of imported goods, and set off trade barriers across the
World, thereby compounding the downturn. Last week, President Obama
signed an order that increased tariffs on Chinese tyre imports from 4%
to 39%. About the only thing that China imports from the US in Treasury
debt. Interesting times ahead seem assured.
There will be no “week ending” next week, as yours truly celebrates a
milestone birthday. Normal services will resume the following week.
“History
is a guide to navigation in perilous times.
History is who we are”
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