Week ending 23rd April 2010 

US economic data released this week included the March PPI numbers, which were higher than forecast at 0.7%, now running at 6.6% annualised. Durable goods orders for the same month pleased economists, if you strip out transport, but if included the figure was a below forecast of -1.3%.It didn’t really matter to investors’ as new home sales for March blew out all expectation by soaring by 27%, the biggest monthly increase in 47 years, albeit that it was bouncing off a record low in February and was likely fuelled by customers trying to qualify for federal tax credits that will expire at the end of April. The Dow rose by 1.7%, whilst the S&P 500 and the NASDAQ gained 2.1%, whilst 2% respectively.

Euro-Zone advance consumer confidence for April was put at - 15% versus the prior -17 and the economic sentiment survey, for the same month, came in at 46 against the forecast 37.9. The UK registered its biggest annual budget deficit since the Second World War, which at £152.8BN for the fiscal year ending March was 76% higher than a year earlier. March CPI came in at a higher than expected 3.4% annualised retail sales fell in March whilst 3 month unemployment in February rose to 8% from the previous 7.8%. The FTSE 100 index ended lower by 0.4%, whilst the French CAC gave up 0.9%.The German DAX gained 1.3%.

Out East Chinese banks have been told to stop loans for 3rd home purchases, as the Government steps up measures to cool property prices, whilst in the land of OZ the Government is looking to restrict foreign ownership of property, blaming “Johnny Foreigner” for escalating home prices, despite a statement from one of the country’s largest agents that total sales to foreigners last year was just 0.6$ of total sales. The Nikkei fell by 1.7% whilst the Hang Seng lost 2.8%.

The $US index rose by 0.7% to 81.4, with other gainers including the $Canadian and the $Kiwi, up by 1.3% and 1.2%. Losers included the Yen and the Euro, falling by 1.9% and 1% respectively. Sovereign debt yields were varied this week, with German bund yields lower by 2bps to 3.06% and UK 10-year yields higher by 6bps to 4.04%. Japanese JGB yields eased by 3bps, ending the week at 1.31% whilst US Treasury yields ended higher, as the 5 year jumped by 5% to 2.6% and the 10 year rose by 1.25%, ending the week at 3.82%.

Within the commodities complex the $crude oil price rose by 0.8% to $85 a barrel, whilst the price of $Gold saw a 1.8% gain to $1158oz.

Next week sees the latest home prices for the US and for the UK and Q110 advance GDP data. The Euro-Zone releases April CPI estimates and March unemployment numbers, whilst Japanese CPI and unemployment figures are also announced.

The G20 Finance Ministers meet up in Washington this weekend, together with the IMF and The World Bank. On Friday they congratulated themselves on the economic recovery so far and said that it was time to plan the unwinding of the stimulus measures they had put in place to end the financial crisis. Read that as higher taxes and higher interest rates. Meanwhile, in the US, the FDIC shut down 7 banks, all in Illinois, bringing the total failures year to date to 57.

“When everything is worth money, then money is worth nothing"