Week ending 19th March 2010 

US economic data released this week included an unexpected decline in house builder confidence, which fell to 15 in March from the 17 reading of February. Staying with housing, February starts fell by 5.9% versus the previous month’s 6.6% rise, albeit that building permits contracted by less than expected by analysts. The FOMC left interest rates on hold, whilst February PPI came in at a higher than expected 4.9% annualised versus the 4.4% forecast. The Dow rose by 1.1% whilst the S&P 500 and the NASDAQ were higher by 0.9% and 0.3% respectively.

Euro-Zone CPI for February was stated at 0.3% and 0.9% year on year, whilst the ZEW economic sentiment survey for March came in lower than expected, at 37.9 versus 38.5. UK trade “official” 3 month unemployment in January came in at a lower than forecast 7.8%, despite an ONS report that suggests 1 in 4 adults in Britain are not working. The FTSE 100 index rose by 0.4%, whilst the French CAC remained evn and the German DAX ended higher by 0.6%.

Out East, the Reserve Bank of India increased interest rates by 0.25% to 3.5%, the first increase in 2 years, whist in Japan, February consumer confidence improved to 40 against January’s 39.4. We are interested to note that whereas “official” unemployment in Australia is put at 5.2%, one of the lowest unemployment rates in the developed world,, their Bureau of Statistics classifies an “Aussie” as “employed” if he or she works for the grand total of 1 hour over the month during which the survey takes place . The Nikkei gained 0.7% whilst the Hang Seng gained 0.8%.

The $US index was higher by 1.2% at 80.75, with other gainers including the $Kiwi, higher by 0.8%. Losers included the Euro and the British pound, falling by 1.7% and 1.3% respectively. German bund yields fell by 6bps this week to 3.11% and UK 10-year yields dropped by 14bps to 3.95%, whilst Japanese JGB yields rose by 2bps, ending the week at 1.36%. For US Treasury yields, 5 years gained 2.45% to 2.45% whilst the 10 year declined by 0.6%, ending the week at 3.69%.

Within the commodities complex the $crude oil price eased by 0.7% to $81 a barrel, whilst the price of $Gold had a volatile week, rising $17 on Tuesday, only to fall by $20 on Friday, for a net gain of 0.4% on the week, closing it at $1107oz.

Next week sees the latest home sales and durable goods orders for the US and consumer confidence readings for the Euro-Zone. It’s budget week for the UK, together with February retail sales numbers, whilst for Japan will see the release of February CPI and trade data.

As $US27 BN of his country’s debt comes due over the next two months, Greek Prime Minister, George Papandreou ratcheted up the game of chicken that is going on between Greece, the EU and the IMF, the latter who Papandreou has threatened to turn to if assistance cannot be found from Europe. Whilst the majority of the EU bureaucracy and the ECB are desperate to keep the IMF out of “Europe’s family affairs,” the Germans are playing hardball, as it is they who after all will have to pick up the bulk of the tab. Needless to say that many EU politicians are blaming the short sellers for Greece’s predicament.

“Bureaucracy is the art of making the possible impossible"