US, economic data released this week
was light, but included an improved trade deficit for August and a fall
in consumer credit of $12BN versus the -$10Bn expected. The Dow jumped
by 4%, whilst the S&P 500 and the Nasdaq ended the week higher by 4.5%
each.
The Bank of England MPC and Europe’s ECB left their respective interest
rates on hold, at 0.5% and 1% respectively as UK industrial production
fell by 11.2% annualised in August and Euro-Zone Q209 GDP fell by 4.7%
year on year. On the plus side, UK house prices rose by 1.6% in
September, according to the Halifax, whilst August retail sales for the
Zone, disappointed at -2.6% annualised versus the prior reading of
-1.9%. The FTSE 100 index gained 3.5%, whilst the French CAC and the
German DAX ended higher by 4.1% and 4.5% respectively.
Out East, luxury-home sales in Hong Kong almost tripled in September
from a month earlier as mainland Chinese residents bought properties in
the city, according to a Bloomberg article, whilst the reserve Bank of
Australia raised interest rates by 0.25% to 3.25%, from a 49 year low.
The Nikkei rose by 2.9% and the Hang Seng jumped by 5.5%.
The $US index fell by 0.8% to 76.43, despite Friday’s rally, with the
gainers over the week including the “commodity currencies” of OZ,
Canada, South Africa and Norway. Sovereign debt yields moved higher this
week, with German bund yields up by 8 bps to 3.2%, whilst Japanese and
UK 10-year yields rose by 3bps, and 1bps, ending the week at 1.28% and
3.45% respectively. US Treasury 5 and 10 year yields jumped by 6.4% and
5%, ending the week at 2.35% and 3.38%, as Bernanke hinted at higher
interest rates to come. We are interested to note that the US ended its
2009 fiscal year with a deficit of $US1.4Trillion, the largest since
1945, as tax revenue fell by $420BN, or 17%, to the lowest level in more
than 50 years.
Within the commodities complex the $crude oil price rose by 3.3% to
$72.25 a barrel, whilst the price of $Gold jumped by 4.6%, ending the
week at $1049oz, aided by the “dollar demise rumours.”
Next week sees the latest CPI data for the US, the Euro-Zone and for the
UK, with advance retail sales and industrial production numbers also due
out for the US. August Euro-Zone industrial production for August will
be released, together with the region’s trade balance. The latest
unemployment figures for the UK will be released, whilst in Japan,
September condo sales and consumer confidence data are announced.
US home foreclosure rates rose by 17% in Q209, despite the launch of an
extensive government program aimed at helping borrowers save their homes
by taxpayer money being paid to lenders to lower a borrower’s interest
rate. Unfortunately, however, rising unemployment has undermined the
scheme, not to mention the added pressure likely to be loaded on the
diminishing number of employed Americans, who will have to pick up the
increased tax liability further down the road.
There will be no “week ending” next week, due to travel commitments.
Normal services will resume the following week.
“Government
meddling usually compounds the problem”
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