US, economic data released this week
included improved consumer confidence numbers for January and a larger
than expected jump in Q409 advance GDP figures, at 5.7%. Against this
were disappointing home sales for December, particularly existing home
sales which fell by 16% month on month, and Durable goods orders for the
same month, which fell by more than forecast. Unsurprisingly, the FOMC
left interest rates on hold. The Dow fell by 1%, whilst the S&P 500 and
the Nasdaq ended lower by 1.6% and 2.6% respectively.
Euro-Zone unemployment for December was put at 10%, with the figure for
Spain jumping to 18%, whilst the latest consumer confidence reading for
the zone was forecast at -16, worse than expectations. January CPI was
estimated at 1% against the predicted 1.2%. UK Q409 advance GDP was
reported at a paltry 0.1% versus the 0.4% expected, changing the
annualised figure at -3.2%, still grim. Their was better news for home
owners, according to the Nationwide, who reported that average house
prices rose by 1.2% in January and by 8.6% over the past year. The FTSE
100 index lost 2.2%, whilst the French CAC and the German DAX ended
lower by 2.1% and 1.5% respectively.
Out East, the Bank of Japan left interest rate policy on hold as
unemployment in December was reported at a larger than expected 5.1%,
whilst the countries CPI figure for December saw a 2.1% decline.
Elsewhere, the Reserve Bank of India raised the reserve ratio for banks
to 5.75% from 5% on concerns over inflation and possible asset bubbles.
The Nikkei fell by 3.7% whilst the Hang Seng gave up 2.9%.
The $US index gained 1.5% to 79.47, with the losers including the
Brazilian Real, off by 3.85% and the Norwegian Krona, which fell by
1.95%. German bund yields fell by 2bps this week at 3.1% and UK 10-year
yields eased by 1bps to 3.91%, whilst Japanese JGB yields gained 2bps to
1.34%. US Treasury 5 and 10 year yields rose by 0.3%, ending the week at
2.35% and 3.61% respectively.
Within the commodities complex the $crude oil price fell by 2.2% to
$72.9 a barrel, whilst the price of $Gold ended lower by 1%, closing the
week at $1082oz.For the month the price of Oil and Copper, both guides
to economic growth, fell by 11.4% and 9.8% respectively
Next week sees the latest US and UK consumer credit data, with the
former also announcing January jobs analysis and the latter January PPI
numbers. December PPI and retail sales data is also due out for the
Euro-Zone and interest decisions from the both the ECB and from the Bank
of England MPC will be announced. Japanese vehicle sales for January
will be released as the embarrassing recall of faulty cars by Toyota
spills over to rival Honda.
The” great and the good” have met up this week, in Davos, Switzerland,
for the annual bun fight called “The World Economic Forum.” The “stars”
this year appear not to be the hedge fund or private equity “prima
donnas’ but the regulators and central bankers, who contrary to
accepting any responsibility for the financial crisis see an opportunity
of squeezing extra revenue and power from the engine of economic growth,
the financial sector.
“The
perfect bureaucrat is the man who manages to
make no decisions and escape all responsibility”
