US, economic data released this week
included an improved trade deficit number for January, showing - $37.3BN
against the - $41BN forecast. Advance retail sales rose by a better than
expected 0.3% whilst consumer confidence in March, as measured by the
provisional University of Michigan data, fell to 72.5 from late
February’s 73.6. Investors grew more upbeat on the health of the banks,
with Citigroup Inc jumping by 13.4% on the week. The Dow rose by 0.6%
whilst the S&P 500 and the NASDAQ were higher by 1% and 1.8%
respectively.
Euro-Zone industrial output for January rose by 1.7%, the largest
monthly gain in more than two decades. Meanwhile, the UK trade deficit
for January came in at a worst than expected - £3.7BN, the widest in 17
months, whilst industrial production for the same month contracted by
1.5% annualised. The FTSE 100 index rose by 0.5%, whilst the French CAC
and the German DAX ended higher by 0.4% and 1.2% respectively.
Out East, China’s inflation for February jumped by 2.7%, a 16 month high
and the Ministry of Finance is to ban all guarantees by local
governments, estimated to be as much as $US1.7 Trillion, as the
Government frets over the pace of loan growth. Elsewhere, Japan’s Q409
GDP was forecast at 0.9% versus the 1.6% expected. The Nikkei gained a
robust 3.7% whilst the Hang Seng gained 2%.
The $US index was down by 0.8% to 79.8, with other losers including the
Yen, lower by 0.2%. Gainers included the Swissie, up by 1.5% and the
Euro, which gained 1%. German bund yields added 1bps this week to 3.17%
and UK 10-year yields increased by 3bps to 4.09%, whilst Japanese JGB
yields rose by 3.5bps, ending the week at 1.34%. US Treasury 5 and 10
year yields gained 3.2% and 0.8%, ending the week at 2.42% and 3.7%
respectively.
Within the commodities complex the $crude oil price remained level over
the week, at $81.5 a barrel, whilst the price of $Gold fell by 2.9%,
closing the week at $1102oz.
Next week sees the latest “official” unemployment data for the Euro-Zone
and for the UK and CPI numbers for the former and the US. The US also
releases February housing starts and the FOMC announce any interest rate
change. Public finances will be under the spotlight in the UK,, whilst
in Japan, February consumer confidence and store sales data is due to be
announced.
A further thought on US banks (or any other come to that) is to “how
they use your money.” Well, in the case of the US, they have about
$US6.9 Trillion in deposits and $6.9 Trillion in loans, with the bulk of
the loans going into mortgage backed securities. At the last count 1 in
every 418 US homes have filed for foreclosure whilst the default rate on
commercial mortgages has doubled in Q409. Food for thought indeed.
“Bank failures are caused by depositors who
don’t deposit enough money to cover losses due
to mismanagement"
