US economic data released this week
included the February trade deficit of -$39.7BN versus the -$37BN of
January and the April provisional University of Michigan consumer
confidence number of 69.5, far worse than the 75 forecast. Housing
starts and advance retail sales for the same month came in better than
expected, whilst March CPI was at 2.3% year on year, below analysts
projections. Any good news was quickly undone on Friday, as the
aforementioned GS news hit the news wires. The Dow rose by 0.2%, the S&P
500 was lower by 0.2%, whilst the NASDAQ gained 1.1%.
Euro-Zone CPI for March came in at 1.4% year on year, versus the 1.5%
for February, whilst the region’s trade balance swung into surplus in
February, at E2.6BN. The UK’s February trade deficit was better than
forecast but the nationwide consumer confidence survey for March was at
72 against the prior 81.Towards the week’s end, 70% of European flights
were cancelled as the region’s airports were shut down due the an
erupting volcano in Iceland. The FTSE 100 index ended lower by 0.5%,
whilst the French CAC and the German DAX fell by 1.6% and 1.1%
respectively.
Out East the Chinese economy grew at its fastest pace in nearly three
years in Q110, at 11.9%.and authorities continued their clamp down on
property speculation by ordering 30% down payments on purchases of first
homes larger than 90 square meters and 50% minimum deposits on second
homes. Elsewhere, Japanese condo sales in March soared by 54.2%. The
Nikkei fell by 0.9% whilst the Hang Seng lost 1.6%.
The $US index dipped by 0.2% to 80.8, with other losers including the
South African Rand, lower by 1.8% and the $Kiwi, off by 1.1%. Gainers
included the Yen and the $Singapore, rising by 1.1% and 1% respectively.
Sovereign debt yields eased, as the GS news impacted stocks, with German
bund yields lower by 6bps to 3.08% and UK 10-year yields also lower by
6bps to 3.98%, whilst Japanese JGB yields eased by 4bps, ending the week
at 1.34%. US Treasury yields followed suit, with the 5 year lower by
6.3% to 2.47% whilst the 10 year declined by 3%, ending the week at
3.77%.
Within the commodities complex the $crude oil price eased by 0.3% to
$83.5 a barrel, whilst the price of $Gold saw a 2.1% fall to $1137oz.
Next week sees inflation data for the US and for the UK, with the former
also announcing home sales and durable goods orders for the month of
March. March jobs data and retail sales for the UK are due out, as are
the latest PSBR numbers. EU government debt/GDP will be released,
together with Euro-Zone confidence numbers for April. March Japanese
consumer confidence, machine tool orders and the trade balance data will
be released.
As EU Finance Ministers meet up in Spain this weekend (air transport
allowing) the subject of the Greece debt crisis may be reaching an acute
stage. The recently announced “plans to step in and support,” without
any real commitment being in evidence, looks set to be shortly tested as
Greek 10 year bond yields appear ready to spike over the recent 7.5%
high.
“Banking was conceived in iniquity and born in
sin"
