July in Figures
July 31, 2010
July was a month of lessening risk aversion in spite of mounting concern about U.S. and Japanese growth prospects and continuing unease over the fiscal austerity that is coming to Europe. The dollar fell across the board, and significant stock market losses in the second quarter were trimmed unevenly. Ten-year sovereign debt yield changes for countries shown below were trivial except for a 9-basis point rise in Germany. The 3-month euribor minus eurodollar doubled to 38 basis points from 18 basis points at midyear. Gold and oil moved by similar amounts but in opposite directions in the month. Consistent with the motif of subsiding risk aversion, gold prices retreated 4.9%, falling below $1200 per ounce, while oil advanced 4.4%.
Over the year since the end of July 2009, net rises of 9.3% the dollar/euro and 23.8% in gold prices — although an historically unusual juxtaposition — are consistent with bouts of risk aversion fed by an unusual level of uncertainty. A net 57-basis point drop in the ten-year Treasury yield compared to a year ago also indicates that investors remain shell-shocked by the past, unimpressed by a 3.2% rise of U.S. real GDP between 2Q09 and 2Q10, and fearful about what the future may hold. Low long-term interest rates had long been attributed to Chinese buying of Treasury securities. Such activity had reportedly slowed, as Beijing officials diversify their reserve portfolio and introduce some flexibility into the management of the yuan. With the dollar faltering against other currencies in July, the yuan firmed only 0.1% against the greenback this past month.
| 10-Yr Yield | 06/30/10 | 07/30/10 | Chg vs End-June |
| U.S. | 2.93% | 2.91% | -2 Basis Points |
| Germany | 2.58% | 2.67% | +9 |
| Japan | 1.09% | 1.07% | -2 |
| U.K. | 3.35% | 3.32% | -3 |
| Canada | 3.08% | 3.11% | +3 |
| Switzerland | 1.53% | 1.50% | -3 |
| 3-month euros | |||
| U.S. | 0.53% | 0.45% | -8 Basis Points |
| Euroland | 0.71% | 0.83% | +12 |
| Japan | 0.24% | 0.24% | 0 |
| U.K. | 0.73% | 0.75% | +2 |
| Canada | 0.84% | 0.99% | +15 |
| Swiss | 0.11% | 0.17% | +6 |
| FX | Pct Chg in USD | ||
| EUR/USD | 1.2228 | 1.3039 | -6.2% |
| USD/JPY | 88.46 | 86.48 | -2.2% |
| USD/CHF | 1.0783 | 1.0420 | -3.4% |
| GBP/USD | 1.4944 | 1.5696 | -4.8% |
| AUD/USD | 0.8405 | 0.9042 | -7.0% |
| NZD/USD | 0.6849 | 0.7248 | -5.5% |
| USD/CAD | 1.0649 | 1.0288 | -3.4% |
| USD/CNY | 6.7829 | 6.7755 | -0.1% |
| Equities | Pct Change | ||
| S&P 500 | 1031 | 1102 | +6.9% |
| Nasdaq | 2109 | 2255 | +6.9% |
| Djia | 9774 | 10466 | +7.1% |
| Dax | 5966 | 6148 | +3.1% |
| Nikkei | 9383 | 9537 | +1.6% |
| Ftse | 4917 | 5258 | +6.9% |
| Canada TSE | 11294 | 11713 | +3.7% |
| Swiss SMI | 6128 | 6201 | +1.2% |
| Commodities | Pct Change | ||
| Oil, $ per brl | 75.63 | 78.95 | +4.4% |
| Gold, $ per oz | 1242.25 | 1181.00 | -4.9% |
Copyright Larry Greenberg 2010. All rights reserved. No secondary distribution without express permission.
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