US, economic data released this week
was in the main below par, kicking off with the November 2009 trade
numbers, where the deficit widened to $36.4BN, followed by December
advance retail sales, which fell by 0.3% versus the 0.5% gain expected.
CPI in December was lower than forecast, at 0.1% and the previous
reading of 0.4% and the provisional University of Michigan consumer
confidence number for this month was lower than expected. After their
positive start to the New Year, stocks struggled, with the Dow even,
whilst the S&P 500 and the Nasdaq fell by 0.8% and 1.25% respectively.
Euro-Zone interest rates were left on hold, at 1%, by the ECB as the
region’s December CPI number came in as expected, at 0.3% and November
industrial production contracted at 7.1% year on year. The UK saw an
improvement to its trade deficit in November and to its industrial
production data, albeit that it also contracted at 6% annualised rate.
The FTSE 100 index lost 1.4%, whilst the French CAC and the German DAX
ended lower by 2.3% and 2.7% respectively.
Out East, China’s banks had their reserve requirements increased by 0.5%
in an effort to slow the runaway credit boom. Large banks will now have
to set aside 16% of their deposits and smaller ones 14%. Elsewhere,
wholesale prices in India jumped to 7.31% annualised in December from
the 4.78% seen a month earlier. The Nikkei rose by 1.7% whilst the Hang
Seng fell by 2.9%.
The $US index slipped by 0.3% to 77.24, with the Brazilian Real also
lower by 2.6%. Gainers included the Yen and the British Pound, higher by
1.1% and 1.5%. Risk aversion saw sovereign debt yields fall, with the
exception of Greece, where yields surged by 41bps to 5.99%. German bund
yields fell by 12bps this week at 3.26%, whilst Japanese and UK 10-year
yields eased by 3.5bps and 12bps, ending the week at 1.32% and 3.94%
respectively. US Treasury 5 and 10 year yields also fell by 5.7% and
3.5%, ending the week at 2.42% and 3.68% respectively.
Within the commodities complex the $crude oil price fell by 5.3% to
$78.4 a barrel, whilst the price of $Gold eased by 0.6%, closing the
week at $1131oz.
Next week is a shortened trading week for the US, as they observe the
Martin Luther King Jr holiday on Monday, with December PPI figures and
housing starts due for release during the rest of the week. The UK
releases December CPI, retail sales and November unemployment numbers,
whilst a light week for the Euro-Zone sees the ZEW economic survey for
January. Out East, Japan will announce December consumer confidence
figures and store sales.
It’s an interesting time for American politics as the Massachusetts race
for the Senate comes down to the wire on Tuesday, “coincidentally,” the
same week for a major health-care reform conference being held in
Boston. Should the election favour the republican candidate,, Scott
Brown, the balance of the senate will likely deal a fatal blow to
Obama’s health care plan and put other pieces of legislation, such as
the raising of the US debt ceiling, under threat.
“A
half truth is a whole lie.”
