FYI | Jun 18 2007
By Greg Peel
Following on from the PPI figure on Thursday, the US CPI registered a benign core reading of 0.1% on Friday taking annual core inflation down from 2.3% to 2.2%. Surprisingly, the cost of goods in general are looking soft in the face of rising commodity prices, import prices and a weaker US dollar. It may well be that these effects will begin to filter through later in the year. US bond yields fell back to 5.11%.
This result was enough to consider that the Fed will remain on hold for the foreseeable future, despite the fact that headline inflation jumped by 0.7% due to a strong rise in gasoline prices. Annual headline inflation is now up to 2.7%.
With inflation out of the way, attention now turns to the state of the US housing market. Tonight brings the homebuilders index for June as well as June capacity utilisation, while Tuesday sees May housing starts and building permits. Thursday ends the data with initial jobless claims, the leading indicators measure for May and the benchmark Philadelphia Fed economic measure for June.
The Australian housing market will also be under the microscope. Tuesday sees merchandise imports and a busy Wednesday brings first quarter housing starts, June skilled vacancies, May new vehicle sales and the Westpac leading index for April. On Thursday the RBA releases its bulletin, although all the information was provided by the governor in his speech last week.
It should be a strong start to the week on the local bourse with the Dow up 85, a continuing recovery in base metals with nickel up another 4% and copper 2% in New York, gold edging up to US$651.20/oz and oil closing at US$68.00/bbl for July delivery. The SPI Overnight was up 40 points.
China may become the centre stage of investor attention again as rumours about more government actions to rein in the abundant liquidity problem in the country have intensified over the past few days.
