US, economic data released this week
included October home sales, where existing ones surged by 10.1% versus
the 2.3% expected, boosted by discounted foreclosures snapped up by
bargain hunters. The S&P/Case Shiller home price index, for the largest
20 cities, came in at -9.36% for September year on year, worse than the
expected -9.1% but an improvement on Augusts’ -11.3%. October durable
goods orders disappointed at -0.6%, whilst Q309 GDP was revised lower
from 3.5% annualised to 2.8%. In a volatile, holiday shortened week, the
Dow eased by 0.08%, whilst the S&P 500 and the Nasdaq ended the week
lower by 0.4% respectively.
The euro-area consumer confidence reading for November is put at -17, as
expected, whilst the area’s industrial new orders fell by 17% versus the
prior -18%. Meanwhile, UK Q309 GDP came in as expected by analysts at
-5.1% annualised, whilst the UK’s budget deficit for October was
reported as the worst month since records began in 1993. The FTSE 100
index and the French CAC eased by 0.1% and 0.2%, whilst and the German
DAX rose by 0.4%.
Out East, as concerns grow over China’s food security, the corn harvest,
the World’s second largest, fell by 13% to a four year low, thanks to
drought conditions, whilst the wholesale price of garlic, which
apparently has powers to ward off swine flu, have quadrupled since March
of this year. Elsewhere, Japan’s unemployment rate in October fell for a
third month to 5.1%. The Nikkei ended lower by 4.4% and the Hang Seng
fell by 5.9%.
The $US index declined by 0.9% to 75, with other fallers over the week
including the $NZ, lower by 2% and the Won, which gave up 1.4%.
Sovereign debt yields fell this week, with German bund yields lower by
9bps to 3.16%, whilst Japanese and UK 10-year yields fell by 6bps, and
10bps, ending the week at 1.25% and 3.54% respectively. US Treasury 5
and 10 year yields gave up 5.7% and 3.7%, ending the week at 2.05% and
3.23%.
Within the commodities complex the $crude oil price remained level over
the week, at $76.7 a barrel, whilst the price of $Gold ended higher by
2.3% at $1178oz, despite the $60 intra-day swing as the Dubai debt news
hit the wires.
Next week sees the latest housing data for the US, Japan and for the UK,
with vehicle sales numbers also due for release for the US, the UK and
for Japan. October consumer credit figures for the UK will be released,
whilst the Euro-Zone announce October PPI, Retail sales and Q309
provisional GDP. Perhaps the most closely watched numbers will be the
latest employment data for the US.
We ended the 23rd October summary with,” The $Gold price, the Dow and
the Dollar have been in a very tight range over the past fortnight, a
situation which is unlikely to last for much longer. The three asset
classes are inter-related and over the past few years two of them have
been closely correlated and the other one inverse to them.” Well the
relationship has lasted for a further 3 weeks until an attempt by Dubai
to delay debt payments for six months has rattled world markets. Most
global stock markets fell on Thursday while the U.S. market was closed
for the Thanksgiving holiday, hence the US followed suit on Friday’s
shortened trading day. Commodities, including Gold, sold off along with
stocks, while the U.S. Dollar moved higher. A reflexion point may have
been reached.
“The more corrupt the state, the more numerous
the laws”
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