Americans and Europeans Uncertain About Future |
American treasury obligations increased in price, steadily moving to a record-high price last seen in December 2008. Yields on 10-year American government bonds fell 2 basis points and are currently at 2.16%. The Japanese yen appreciated in the morning after statistics coming out of the US showed that the Consumer Confidence Index in that country fell sharply. The MSCI Asia Pacific Index is sometimes in the positive zone, sometimes in the negative. American stock exchanges closed in the positive zone and futures on the major American indexes are also in the positive zone. Asian stock markets are so far winning back positively from yesterday’s American trading session, although some export companies in the Asian region are under pressure from the negative reports coming out of the US and Europe yesterday.
Europeans’ certainty in the economic situation dropped unexpectedly to a level not seen since December 2008. The indicator, which reflects the sentiment of managers and consumers in the Eurozone, fell to 98.3 from its July level of 103, a level last seen in May 2010. As the Bloomberg information agency reported yesterday, the main reason for the decline in Europeans’ certainty in the future is that governments in most of the Eurozone countries are cutting the overall amount spent on maintaining government services as well as on social benefits for citizens. Also playing a role is the recent announcement by European Commissioner for Monetary and Economic Policy Olli Rehn, stating that it is possible that the predicted GDP growth for the Eurozone in 2011 may be lowered from the current 1.6%. Given such negative statistics, it should also be noted that the overall economic growth indicator for the Eurozone dropped to 0.2%. The unstable situation in the Eurozone, RoyalMaxBrokers experts say, is creating speculation that the interest rate may change; a definite decision on this will be made public on September 8.
Confidence among American consumers fell according to statistics for August 2011. The indicator dropped to a low last seen in October 2008; this comes at a time when Americans are also increasingly uncertain about employment, their income, and about favorable business conditions in the country. The Consumer Confidence Index was 44.5, contrary to the predictions of the majority of analysts polled by Bloomberg. The country’s high unemployment level, downgraded credit rating, and the upheaval over passing a bill to increase the country’s debt ceiling all contributed to American consumers’ lowered expectations. According to Bricklin Dwyer, an analyst with BNP Paribas in New York whose estimate of the Consumer Confidence Index was the most accurate at 45 points, all the facts pointed to decreased demand in the region. 49.1% of consumers polled said that finding work in the US was becoming increasingly difficult.
Head of the Federal Reserve Bank of Minneapolis Narayana Kocherlakota, who voted against keeping the interest rate at a record-low level at the Federal Open Market Committee’s last meeting, announced in his speech yesterday that this time he might not be against a low interest rate which would stimulate the US economy. RoyalMaxBrokers analysts recall that the decision to hold the refinancing rate at 0.25% until mid-2013 was made after Federal Reserve representatives voted for it seven to three; one of the three who voted against it was Kocherlakota. The minutes of the Fed’s meeting published yesterday evening showed that the Fed’s representatives believe that it is quite apparent there is a slump in the American economy and aggressive measures from monetary authorities are required in order to speed up its recovery and reduce the country’s unemployment.
At 4:15PM (Moscow Time) today, ADP will publish data on the number of jobs in the US private sector. The ADP figure will be the main indicator for investors before the US Bureau of Labor Statistics publishes unemployment figures on Friday. According to analysts’ predictions, the number of private sector jobs filled in August will drop from 114,000 to 100,000.
At 4:30PM (Moscow Time), Canada’s Bureau of Statistics will publish data on GDP growth. The majority of analysts are predicting this figure to grow 0.1% in the monthly dynamic. Experts predict that Canada’s GDP growth will be 1.9% in annual terms.
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