Euro weakness enhanced returns for Irish investors, in a reversal of the trend seen in recent weeks. US markets did dip slightly following the release of the latest minutes from the Fed FOMC, which were perceived to strike a cautionary tone.
‘High frequency’ data, such as weekly US jobs claims suggest a slowing of momentum for the recovery, but leading indicators did rise again in July for the second straight month, albeit at a slower pace. The US housing market continues to show strength.
On the back of supportive borrowing rates, confidence amongst homebuilders in August equalled a record high as existing home sales rose 24.7% (per annum) in July. Within the eurozone, bond prices rose and stocks faltered as the pace of the recovery stumbled slightly.
The manufacturing PMI was stable at 51.7, with the equivalent reading for services falling back to 50.1, still just in expansion territory. U.K. PMIs were more encouraging with the services figure showing the strongest reading since 2013. However, Brexit headwinds are gathering as negotiations continue to move at a glacial pace. A number of eurozone countries see COVID cases on the rise once again.
On Sunday, France reported its highest one day jump since April and new U.K. cases stayed above 1,000 for the fourth consecutive day. In the US, the FDA granted emergency approval for a blood plasma treatment as President Trump seeks similar approval for the vaccine under development from AstraZeneca Plc and the University of Oxford.
Global markets moved down slightly last week, by -0.1% in local terms but were up 0.7% in euro terms. Year to date the UK market is down - 21.8% in local terms and -26.6% in euro terms. In contrast, the influential US Market is up 6.6% in local terms and 1.2% in Euro Terms year to date.
Fixed Income & FX
The US 10-year yield finished at 0.63% last week. The German equivalent finished at -0.50%. The Irish 10 year bond yield finished at -0.16%. The Euro/US Dollar exchange rate finished at 1.18, whilst Euro/GBP remained at 0.90.
Oil finished the week at $43 per barrel. Gold finished the week at $1,946 per troy ounce up 28.3% year to date in local terms and 21.7% year to date in Euro terms. Copper finished the week at $6,511 per tonne.
The week ahead
Tuesday 25th August
US consumer confidence and new homes sales go to print.
Thursday 27th August
The 2nd estimates of Q2 US GDP is published.
Friday 28th August
US personal spending and German consumer confidence data is released.