US house prices fell by 6.8% in April and existing home sales fell by 3.0%. The US housing market at the epicentre of the credit crunch has stopped cliff diving but prices are still marching downwards. The pace of the global meltdown has slowed, but judging by last week’s US unemployment claims increase, any meaningful recovery will be long and drawn out.

After the frantic days of the first quarter, perhaps a quiet crawl back to growth might be best outcome for the next few years. Indeed, the World Bank dimmed the lights on the nascent global economic recovery after predicting that progress would be subdued and economic output will drop by 3%.

On currency markets, the pound managed to finish the week flat against the dollar, but lost some ground against the euro. The euro also managed to make good gains against the dollar and held firm against the Japanese Yen. Gold recovered well from a mid week dip and closed slightly up on the week. Oil fared slightly worse, finishing the week just below $70 for the first time in three weeks.

Next week’s action starts with the UK’s Nationwide House Price Index on Tuesday. There have been conflicting prices reported by competing sources recently so there is uncertainty over the forecast numbers which could cause some volatility in sterling pairs. UK current account figures at 12.30 GMT could have a similar impact. The Halifax House Price Index is also scheduled for release next week, but the exact date has not been determined.

Australian retails sales are released on Wednesday and are expected to show a slight improvement on the previous month. The Australian economy continues to show reliance compared to other western nations. Around midday we get the warm up to US Non Farm Payrolls with ADP employment data. It could be a volatile period with ISM manufacturing and pending home sales following this just a couple of hours later.

On Wednesday we have some central banking action with a number of MPC members speaking and the BOE credit conditions survey due. These are followed by the ECB press conference. US Non Farm payroll is brought forward one day to Thursday because of the bank holiday. The EUR/ USD exchange rate could be in play given the amount of data released what will be in effect the final trading day of the week. With US markets closed on Friday, Forex markets could be quieter than usual.

Equities recovered well last week after Monday’s slump, but the see saw nature of last week’s action just underlines that there is still considerable uncertainty over the strength of the global recovery. A No Touch trade predicting that the S&P 500 won’t rise and touch 930 in the next 9 days could return 237%.

Economic Calendar for week 29th June – 3rd July

**Note: All times GMT, not DST**

PLEASE NOTE – All times GMT

Monday June 29th:

UK – 08:30 – Net Lending To Individuals M/M.
UK – 08:30 – Mortgage Approvals.
EU – 09:00 – GFK Consumer Confidence.

Tuesday June 30th:

GE -07:55 – German Unemployment Change.
EU – 08:00 – M3 Money Supply Y/Y.
EU – 08:00 – Private Loans Y/Y.
UK – 08:30 – Current Account.
UK – 08:30 – Final GDP Q/Q.
UK – 08:30 – Revised Business Investment Q/Q.
EU – 09:00 – CPI Flash Estimate Y/Y.
US – 13:00 – S&P/CS Composite 20 HPI Y/Y.
US – 13:45 – Chicago PMI.
US – 14:00 – CB Consumer Confidence.

Wednesday July 1st:

EU – 08:00 – Final Manufacturing PMI.
UK – 08:30 – Manufacturing PMI.
UK – 08:30 – Index Of Services 3M/3M.
US – 11:30 – Challenger Job Cuts Y/Y.
US – 12:15 – ADP Non Farm Employment Change.
US – 14:00 – ISM Manufacturing PMI.
US – 14:00 – Pending Home Sales M/M.
US – 14:00 – Construction Spending M/M.
US – 14:30 – ISM Manufacturing Prices.
US – 14:30 – Crude Oil Inventories.

Thursday July 2nd:

UK – 08:30 – BOE Credit Conditions Survey.
UK – 08:30 – Construction PMI.
EU – 09:00 – PMI M/M.
EU – 09:00 – Unemployment Rate.
EU – 11:45 – Minimum Bid Rate.
EU – 12:30 – ECB Press Conference.
US – 12:30 – Non Farm Unemployment Change.
US – 12:30 – Unemployment Rate.
US – 12:30 – Average Hourly Earnings M/M.
US – 12:30 – Unemployment Claims.
US – 14:00 – Factory Orders M/M.
US – 14:30 – Natural Gas Storage.

Friday July 3rd:
US Bank Holiday.

EU – 08:00 – Final Services PMI.
UK – 08:30 – Services PMI.
UK – 08:30 – Housing Equity Withdrawal Q/Q.

EU – Europe wide
FR – France
UK – United Kingdom
US – United States
GE – Germany

This of course isn’t great news for Barclays, as it raises fresh capital adequacy issues. Barclays has been benefitting from an independence premium, rising faster and further than rivals that had to take part in the UK government asset protection scheme. Now that ‘premium’ is being called into question though, Barclays may be better placed to weather the storm now that optimism appears to be creeping back into the global economic psyche. Barclays recovered well in the later part of the week.

There is certainly evidence of confidence returning to markets, with cash allocation falling for most managed funds, as investors pour money back into the stock market. We could be seeing a great unwinding of the extreme flight to safety that happened post Lehman Brothers. Now it appears traders want to pick up where they left off, pushing resources and stocks higher, and betting on higher inflation in the future. Oil is continuing its bull run. It’s remarkable to note that crude prices have doubled in just 75 trading days, from $33.75 to current levels. Gold hit $989, but reversed to close at $954.88 last week and oil pushed to over $70 at one point.

It is no coincidence that the so called BRIC nations have seen their stock markets rally strongly in 2009, with the Russian stock market up 70% this year. Demand from emerging nations such as China fuelled the commodity boom prior to the credit crunch, now it appears they are leading the recovery with oil following in the tail wind.

Three central banks; the MPC, the ECB, and the BOC produced rate statements last week, with all three choosing to keep rates on hold. This was largely predicted in advance, but there were still some big swings on currencies. The biggest move on GBP/ USD was attributed to rumours that Gordon Brown was quitting. Although the rumours are unfounded, cable dropped dramatically around that time, and is yet to recover.

After a very busy week, last week the coming week has less top tier economic announcements. Highlights include UK manufacturing numbers on Wednesday, followed by US retails sales and unemployment claims on Thursday.

Recently Barry Ritholtz summarised the current market sentiment neatly “While many view the decelerating job losses as signalling the end of the recession, they appear to me as signalling the end of the panic period of the credit crisis. We are now in an ordinary, as opposed to historic, recession”.

Despite positive moves last week, further upside could still be limited for world stock markets. A no touch trade predicting that the S&P 500 won’t rise above last week’s highs and touch 961 at any point during the next 9 days could return 109%.

Economic Calendar for week 8th – 12th June

**Note: All times GMT, not DST**

PLEASE NOTE – All times GMT

Monday June 8th:

EU – 08:30 – Sentix Investor Confidence.
GE – 10:00 – German Factory Orders M/M.
US – 16:30 – FOMC Member Tarullo Speaks.
UK – 23:01 – BRC Retail Sales Monitor Y/Y.
UK – 23:01 – RICS House Price Balance.

Tuesday June 9th:

GE – 06:00 – German Trade Balance.
FR – 06:45 – French Trade Balance.
UK – 08:30 – DCLG HPI Y/Y.
GE – 10:00 – German Industrial Production.
US – 14:00 – IBD/TIPP Economic Optimism.
US – 14:00 – Wholesale Inventories M/M.

Wednesday June 10th:

GE – 06:00 – German Final CPI M/M.
FR – 06:45 – French Industrial Production.
UK – 08:30 – Manufacturing Production M/M.
UK – 08:30 – Trade Balance.
UK – 08:30 – Industrial Production M/M.
US – 12:30 – Trade Balance.
US – 14:30 – Crude Oil Inventories.
US – 16:15 – FOMC Member Duke Speaks.
US – 18:00 – Beige Book.
US – 18:00 – Federal Budget Balance.
UK – 23:01 – NIESR GDP Estimate.

Thursday June 11th:

FR – 06:45 – French Final Non-Farm Payrolls Q/Q.
EU – 08:00 – ECB Monthly Bulletin.
UK – 08:30 – Consumer Inflation Expectations.
US – 12:30 – Core Retail Sales M/M.
US – 12:30 – Retail Sales M/M.
US – 12:30 – Unemployment Claims.
US – 14:00 – Business Inventories M/M.
US – 14:30 – Natural Gas Storage.
US – 17:05 – FOMC Member Lockhart Speaks.
UK – 23:01 – BOE Quarterly Bulletin.

Friday June 12th:

GE – 06:00 – German WPI M/M.
FR – 06:45 – French CPI M/M.
FR – 06:45 – French Gov Budget Balance.
EU – 09:00 – Industrial Production M/M.
US – 12:30 – Import Prices M/M.
US – 13:55 – Prelim UoM Inflation Expectations.
US – 13:55 – Prelim UoM Consumer Sentiment.

EU – Europe wide
FR – France
UK – United Kingdom
US – United States
GE – Germany

Funds are flowing out of ‘safe’ assets into riskier, more inflation resistant assets, such as equities, gold and oil. Oil and Gold in particular are in demand with oil touching $66.46 on Friday, and gold surging to $980. It is interesting to note that oil is now 45% below its peak in 2007, while the Dow Jones is down 60%. Oil fell further, but has recovered quicker.

UK banking shares managed a positive week, with Barclays once again leading the pack. There was a midweek wobble on the release of the FSA’s stress test methodology, which many have interpreted as not being stressful enough. The market appears to have priced in more adverse test conditions, causing many traders to re-asses their assumptions about the UK banking sector’s ability to weather a sustained economic downturn.

The coming week starts with a bank holiday across most of Europe. UK manufacturing PMI and US ISM manufacturing data are the standout economic releases for the day. Tuesday brings more US housing data with the release of pending home sales. Wednesday brings ADP non farm employment changed and Fed chairman Bernanke testifying. Thursday is extremely busy with rate statements due from the ECB and MPC and Bank of Canada. Friday closes an already busy week with Non Farm payroll numbers.

In the US, it seems to be the case that jobless claims data is setting a new record every week. Continuing claims are showing no signs of retreating, and it is no coincidence that mortgage delinquencies reached a record high of 9.12%. There was some positive news with new home sales rising month on month, but the down trend remains very much in place for the time being.

The resilience of the rally in equities is all the more impressive considering the onslaught of negative economic data, and the massive GM bankruptcy running in the background. However, lest we get ahead of ourselves, there is still a long way to go for both the stock market and the global economy.

A barrier range trade biased to the upside could be the best way to play this. A barrier range trade predicting that the Dow Jones (wall Street) won’t touch 7750 or 9250 in the next 60 days could return 110%.

Economic Calendar for week 1st – 5th June

**Note: All times GMT, not DST**

PLEASE NOTE – All times GMT

Monday June 1st:

Bank Holiday FR, GE

EU – 08:00 – Final Manufacturing PMI.
UK – 08:30 – Manufacturing PMI.
US – 12:30 – Core PCE Price Index M/M.
US – 12:30 – Personal Spending M/M.
US – 12:30 – Personal Income M/M.
US – 14:00 – ISM Manufacturing PMI.
US – 14:00 – Construction Spending M/M.
US – 14:00 – ISM Manufacturing Prices.

Tuesday June 2nd:

UK – 08:30 – Construction PMI.
UK – 08:30 – Net Lending To Individuals M/M.
UK – 08:30 – Mortgage Approvals.
EU – 09:00 – Unemployment Rate.
US – 14:00 – Pending Home Sales M/M.
UK – 23:01 – Nationwide Consumer Confidence.

Wednesday June 3rd:

EU – 08:00 – Final Services PMI.
UK – 08:30 – Services PMI.
EU – 09:00 – PMI M/M.
EU – 09:00 – Revised GDP Q/Q.
US – 11:30 – ADP Non-Farm Employment Change.
US – 14:00 – Fed Chairman Bernanke Testifies.
US – 14:00 – ISM Non-Manufacturing PMI.
US – 14:00 – Factory Orders.
US – 14:30 – Crude Oil Inventories.

Thursday June 4th:

EU – 09:00 – Retail Sales M/M.
UK – 11:00 – Official Bank Rate.
EU – 11:45 – Minimum Bid Rate.
US – 12:00 – FOMC Member Dudley Speaks.
EU – 12:30 – ECB Press Conference.
US – 12:30 – Unemployment Claims
US – 12:30 – Revised Non-Farm Activity Q/Q.
US – 12:30 – Revised Unit Labour Costs Q/Q.
US – 12:45 – Fed Chairman Bernanke Speaks.
US – 14:30 – Natural Gas Storage.

Friday June 5th:

EU – 07:50 – ECB President Trichet Speaks.
UK – 08:30 – PPI Input.
UK – 08:30 – PPI Output M/M.
US – 12:30 – Non-Farm Employment Change.
US – 12:30 – Unemployment Rate.
US – 12:30 – Average Hourly Earnings M/M.
US – 18:15 – FOMC Member Kohn Speaks.
US – 19:00 – Consumer Credit M/M.

EU – Europe wide
FR – France
UK – United Kingdom
US – United States
GE – Germany

Barclays was firmer on speculation that Blackrock and The Bank of NewYork Mellon may compete to acquire the BGI unit. Barclays seemed unaffected by reports that the creditors acting on behalf of Lehman Brothers are claiming foul play in the rushed purchase of the former US brokerage unit.

Elsewhere, Goldman’s helped to boost the financial sector in the US with an upgrade to Bank of America. It wasn’t plain sailing all the way for financials though with Lloyds dropping over 25%. Lloyd’s drop was mainly an adjustment in relation to the end of an offer to buy discounted shares. This was a technical adjustment that appears to have been largely accounted for. However, of more worry is the news that Lloyds is under scrutiny from the EU in relation to the government assistance it has received at the depths of the crisis. Lloyds may be forced to sell core assets in order to raise cash to buy the shares back from the government.

At the end of the week, Trader’s had one eye on the long weekend making Friday an unusually quiet day. Markets appear to have got a little too confident that the so called green shoots were leading to a meaningful and sustained economic recovery. What we saw on Wednesday and Thursday was a sudden realisation that we’re not out of the woods yet. US unemployment continues to rise as US consumers, the life blood of the world’s biggest economy, continue to tighten their belt. We had the credit crunch when banks were refusing to lend, now we have the shopping crunch with people refusing to spend.

Next week’s economic announcements of note include US consumer confidence on Tuesday and existing home sales on Wednesday. Thursday is a busy day with UK CBI sales data in the morning, followed by US durable goods orders, unemployment claims and new home sales. Friday’s top announcement is US preliminary GDP data.

The value of US commercial real estate continues to plunge, as the number of high profile shopping malls expected to close in the US this year hits 100. While stock markets slept on Friday, credit and fixed income markets were active, with US treasuries getting slammed on Friday. On Thursday it was UK Gilts that were hit as Moody’s downgraded UK government debt, now traders are speculating that the US government could also lose its AAA rating. The pound was hit, but managed to hold its ground relatively well after the initial shock from the Moody’s announcement. Gold appears to be taking up the slack, as investors hunt for the combination of safety and inflation hedging that gold is perceived to provide.

There have been many false dawns for gold since it hit $1000 in February, but now with inflation creeping back onto the agenda, conditions could be right for a sustained rally.

A One Touch trade predicting that Gold/ USD will hit $1000 in the next 30 days could return 112%.

Economic Calendar for week 25th – 29th May

**Note: All times GMT, not DST**

PLEASE NOTE – All times GMT

Monday May 25th:

Bank Holiday UK, US

GE – 08:00 – German IFO Business Climate.
EU – 10:00 – Buba President Weber Speaks.

Tuesday May 26th:

GE – 06:00 – GfK German Consumer Climate.
GE – 06:00 – German Final GDP Q/Q.
GE – 06:00 – German Import Prices M/M.
FR – 06:45 – French Consumer Spending.
EU – 08:00 – Current Account.
EU – 09:00 – Industrial New Orders M/M.
US – 13:00 – S&P/CS Composite 20 HPI Y/Y.
US – 14:00 – CB Consumer Confidence.
US – 14:00 – Richmond Manufacturing Index.

Wednesday May 27th:

UK – 08:30 – BBA Mortgage Approvals.
US – 14:00 – Existing Home Sales.
US – 14:00 – HPI M/M.

Thursday May 28th:

UK – 01:25 – MPC Member Tucker Speaks.
GE – 07:55 – German Unemployment Change.
EU – 09:00 – Consumer Confidence.
UK – 10:00 – CBI Realised Sales.
US – 12:30 – Core Durable Goods Orders M/M.
US – 12:30 – Unemployment Claims.
US – 12:30 – Durable Goods Orders M/M.
US – 14:00 – New Home Sales.
EU – 14:15 – Buba President Weber Speaks.
US – 15:00 – Crude Oil Inventories.
UK – 23:01 – GfK Consumer Confidence.

Friday May 29th:

GE – 06:00 – German Retail Sales M/M.
EU – 08:00 – M3 Money Supply Y/Y.
EU – 08:00 – Private Loans Y/Y.
EU – 09:00 – CPI Flash Estimate Y/Y.
EU – 09:15 – ECB President Trichet Speaks.
US -12:30 – Prelim GDP Q/Q.
US -12:30 – Prelim GDP Price Index Q/Q.
US – 13:45 – Chicago PMI.
US – 13:55 – Revised UoM Consumer Sentiment.
US – 13:55 – Revised UoM Inflation Expectations.

EU – Europe wide
FR – France
UK – United Kingdom
US – United States
GE – Germany

US markets were also strong with Nasdaq 100 making it eight winning weeks on the trot. The rally came despite record continuing jobless claims in the US. However, it is thought that the decline in the four week average of weekly claims is pointing to a peak. Investors know they aren’t out of the woods yet, but perhaps what we’re seeing at the moment is a belief that financial Armageddon has been averted.

Markets were idle on Friday, with most of Europe enjoying a bank holiday, and UK traders eyeing the clock ahead of their long weekend. In fact, Friday’s trading on the FTSE 100 was the smallest since June 2008. Historically markets tend to bottom when volatility subsides. The VIX options volatility index continues to drop and credit markets indicate a renewed appetite for risk taking. It appears that traders may finally believe they have a grip on things. The world economy may continue to plummet, but at a much more predictable rate. Whether markets are too complacent, and in for a rude awakening or not, is another question.

The coming week starts in earnest with the release of US Pending home sales on Monday. Tuesday afternoon brings two market moving announcements with Fed chairman Bernanke testifying alongside the release of the latest ISM non manufacturing PMI data. Wednesday brings the ADP Non Farm Employment Change data, with UK Services PMI in the morning. Thursday is busy with the MPC and ECB releasing their official bank rates along with news of any planned central bank actions. The ECB are expected to cut rates by a quarter of 1%. The release of the bank stress test is tentatively planned for the afternoon. Then to cap off an already busy week, we have US Non Farm Payrolls on Friday.

After rising for 8 weeks on the trot, the Nasdaq 100 could be due a pull back.

A bear trade predicting that the Nasdaq 100 will be below 1390 in 9 days could return 100% at BetOnMarkets.com.

Economic Calendar for week 4th – 8th May

**Note: All times GMT, not DST**

Monday May 4th:

Bank Holiday UK & Japan.

GE – 06:00 – Retail Sales M/M.
EU – 08:00 – Final Manufacturing PMI.
EU – 08:30 – Sentix Investor Confidence.
US – 14:00 – Pending Home Sales M/M.
US – 14:00 – Construction Spending M/M.
EU – 18:00 – FOMC Member Lacker Speaks.

Tuesday May 5th:

Bank Holiday Japan.

UK – 08:30 – Construction PMI.
EU – 09:00 – PPI M/M.
US – 14:00 – Fed Chairman Bernanke Testifies.
US – 14:00 – ISM Non-Manufacturing PMI.
UK – 23:01 – Nationwide Consumer Confidence.

Wednesday May 6th:

US – 02:30 – FOMC Member Yellen Speaks.
UK – 08:00 – Services PMI.
EU – 09:00 – Retail Sales M/M.
UK – 09:30 – BRC Shop Price Index Y/Y.
US – 12:15 – ADP Non-Farm Employment Change.
US – 14:30 – Crude Oil Inventories.
US – 21:30 – FOMC Member Yellen Speaks.

Thursday May 7th:

FR – 06:45 – Trade Balance.
GE – 10:00 – Factory Orders M/M.
UK – 11:00 – MPC Rate Statement.
UK – 11:00 – Official Bank Rate.
EU – 11:45 – Minimum Bid Rate.
EU – 12:30 – ECB Press Conference.
US – 12:30 – Unemployment Claims.
US – 12:30 – Prelim Nonfarm Productivity Q/Q.
US – 12:30 – Prelim Unit Labour Costs. Q/Q.
US – 13:15 – FOMC Member Evans Speaks.
US – 14:30 – Natural Gas Storage.
US – 19:00 – Consumer Credit M/M.

Friday May 8th:

Bank holiday France.

GE – 06:00 – Trade Balance.
UK – 08:30 – PPI Input M/M.
UK – 08:30 – PPI Output M/M.
GE – 10:00 – Industrial Production M/M.
US – 12:30 – Non Farm Employment Change.
US – 12:30 – Unemployment Rate.
US – 12:30 – Average Hourly Earnings M/M.
US – 17:00 – FOMC Member Lacker Speaks.
US – 17:15 – FOMC Member Evans Speaks.

EU – Europe wide
FR – France
UK – United Kingdom
US – United States
GE – Germany