US economic data released this week
included the February S&P/CS Home price index, which saw a 0.64% rise,
below forecasts. April consumer confidence exceeded expectations, whilst
the advance Q110 GDP figure came in at 3.2% versus the 3.3% expected and
prior quarter reading of 5.6%. As expected the FOMC left interest rates
on hold. The Dow fell by 1.75%, whilst the S&P 500 and the NASDAQ ended
lower by 2.5% and 2.7% respectively.
Euro-Zone March unemployment was reported at 10%, within it the German
rate fell from 7.8% from 8%, whilst Spain soared to over 20%, the
highest level in a decade. CPI for April was estimated at 1.5% whilst
consumer confidence for the same month remained static. UK average house
prices for April gained 1%, according to the Nationwide, bringing the
year on year rise to 10.5%, the first double digit rise since 2007. The
FTSE 100 index ended lower by 3%, whilst the French CAC and the German
DAX gave up 3.4% and 2% respectively.
Out East Japan’s unemployment rate for March was a higher than expected
5% and the Country remains in deflation as evidenced by March CPI at
-1.2% annualised. Elsewhere, OZ CPI for Q110 was at a higher than
expected 2.9% year on year against the prior quagrter reading of 2.1%.
The Nikkei fell by 1.7% whilst the Hang Seng lost 2.8%.
The $US index rose by 0.6% to 81.88, with other gainers including the
$Kiwi, up by 1.4%. Losers included the $Canadian and the Euro, falling
by 1.9% and 0.7% respectively. Sovereign debt yields fell as stocks took
a bashing, with German bund yields lower by 5bps to 3.01% and UK 10-year
yields down by 19bps to 3.85%. Japanese JGB yields eased by 3bps, ending
the week at 1.28%. US Treasury yields also fell, with the 5 year lower
by 6.7% to 2.42% and the 10 year off by 4%, ending the week at 3.67%.
Within the commodities complex the $crude oil price rose by 1.2% to
$86.2 a barrel, whilst the price of $Gold saw a 1.9% gain to $1179oz.
Next week sees the latest consumer credit figures for the US and the UK
and April vehicle sales for the US and for Japan. The US also release
important employment data, whilst in the Euro-Zone March PPI and retail
sales numbers are due for release, together with an ECB decision on
interest rates. The UK announces consumer confidence and PPI for April,
plus the general election may usher in the first hung Government since
1974.
Returning to the Greek saga, as the markets forced the bureaucrats
collective hands’ EU Ministers and IMF officials agreed this weekend to
a Euro 110BN bailout package, as a three year loan at an approximate 5%
pa interest rate. E80BN of the package will be from the EU, once they
have changed the law to allow it, of which 28% will be shouldered by the
German taxpayer. In return, Greece will freeze public sector pensions,
cut wages and hike VAT from the current 21% to 23%, a sure “winner” to
restore economic growth in an economy dependent on tourism and
consumption.
“The single most exciting thing you encounter in
government is competence, because it’s so rare"
