Succinct summation of week’s events:
Positives:
1) ECB gets help from other central banks in relieving US$ funding stress for European banks until year end
2) Euro basis swap, 3 mo Euribor/OIS spread both narrower on the week and most European bank stocks higher
3) Barely a positive, Sept UoM confidence up a touch from near 31 year lows solely led by Current Conditions
4) The average 30 yr mortgage rate falls another 6 bps to a new low of 4.17% and refi apps rise 6% and purchase apps by 7%
5) Aug IP unexpectedly rises .2% as auto production rises solidly for 2nd straight month as things normalize post Japan disaster
6) India hikes rates again to cool inflation that is damaging their economy
Negatives:
1) EU continues its walk thru Disneyland thinking that the current Greek bailout will work but behind the scenes I have to believe that steps are being taken to prepare for reality (Germans are certainly preparing)
2) Aug US Retail Sales light and July revised down
3) Initial Jobless Claims rise to 428k, the most since late June
4) NY and Philly mfr’g surveys point to continued softness
5) CPI rises 3.8% y/o/y, the most since Sept ’08 and the core rate reaches 2.0%, one year inflation expectations rise to 3 month high in UoM data
6) Economic outlook in UoM falls to lowest since 1980
7) India hikes rates to cool inflation, economic activity feeling the impact
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