August 2010 in Figures
August 31, 2010
August had a different mood from July. Long-term interest rates tumbled, and the dollar rose except against traditional carry trade funding currencies like the Japanese yen and Swiss franc. The yen reached a new 15-year high of 83.61, and the Swissy’s monthly peak of 1.0135 per greenback almost matched the 2010 high. The dollar performed especially well against its Canadian and New Zealand counterparts and even gained 0.5% relative to the Chinese yuan, which ended the month just 0.2% from its July 2008-June 2009 fixed parity. The Swissy and loonie had similar high/low spreads of 1.0618-1.0135 per USD and 1.0672 – 1.0107 per USD during August but ended up at polar corners of those ranges.
With markets focused on a string of weak U.S. indicators and the Fed suspending the planned contraction of its bloated balance sheet, three-month eurodollar deposit rates fell 15 basis points during this past month. Other short-term rates underwent infinitesimal or nil change in contrast. Stocks had risen across the board in July and very sharply in many cases, but in August equities dropped for the most part. Canada proved a notable exception from this pattern. Commodities played ping pong, shifting direction between July and August and not moving in synch. Oil rose 4.4% in July but fell 8.9% in August, while gold advanced 5.6% in the more recent month after a 4.9% decline in July.
Falling equity prices and bond yields plus a strengthening yen, Swissy, and dollar are hallmarks of a risk averse marketplace. Three years after the onset of the world financial panic, the advanced economies are either still smaller than they had been or struggling to gain their old traction or both. Developing economies have shown greater resilience, but Beijing policymakers are taking no chances with the yuan. A plan to renew the Chinese currency’s controlled appreciation, which was launched in mid-June of this year has seemingly been aborted for now.
| 10-Yr Yield | 07/30/10 | 08/31/10 | Chg vs End-June |
| U.S. | 2.91% | 2.47% | -44 Basis Points |
| Germany | 2.67% | 2.67% | -55 |
| Japan | 1.07% | 1.07% | -10 |
| U.K. | 3.32% | 3.32% | -49 |
| Canada | 3.11% | 3.11% | -34 |
| Switzerland | 1.50% | 1.50% | -35 |
| 3-month euros | |||
| U.S. | 0.45% | 0.30% | -15 Basis Points |
| Euroland | 0.83% | 0.83% | 0 |
| Japan | 0.24% | 0.23% | -1 |
| U.K. | 0.75% | 0.73% | 0 |
| Canada | 0.99% | 1.01% | +2 |
| Swiss | 0.17% | 0.17% | 0 |
| FX | Pct Chg in USD | ||
| EUR/USD | 1.3039 | 1.2674 | +2.9% |
| USD/JPY | 86.48 | 84.19 | -2.6% |
| USD/CHF | 1.0420 | 1.0155 | -2.5% |
| GBP/USD | 1.5696 | 1.5346 | +2.3% |
| AUD/USD | 0.9042 | 0.8909 | +1.5% |
| NZD/USD | 0.7248 | 0.6991 | +3.7% |
| USD/CAD | 1.0288 | 1.0659 | +3.6% |
| USD/CNY | 6.7755 | 6.8092 | +0.5% |
| Equities | Pct Change | ||
| S&P 500 | 1102 | 1049 | -4.8% |
| Nasdaq | 2255 | 2114 | -6.3% |
| Djia | 10466 | 10015 | -4.3% |
| Dax | 6148 | 5925 | +3.6% |
| Nikkei | 9537 | 8824 | -7.5% |
| Ftse | 5258 | 5225 | -0.6% |
| Canada TSE | 11713 | 11914 | +1.7% |
| Swiss SMI | 6201 | 6181 | -0.3% |
| Commodities | Pct Change | ||
| Oil, $ per brl | 78.95 | 71.92 | -8.9% |
| Gold, $ per oz | 1181.00 | 1247.45 | +5.6% |
Copyright Larry Greenberg 2010. All rights reserved. No secondary distribution without express permission.
Tags: bonds, commodities, foreign exchange, stocks
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