September and Third Quarter in Figures
September 30, 2010
The dollar performed poorly in September and the third quarter especially against the euro and Australian dollar. A look at the table below makes it hard to argue that Japan’s intervention failed. The yen’s rise against the dollar of less than 1.0% was much smaller than the advance of other currencies. China finally put its “more flexible” yuan policy into effect, but their currency still depreciated against most currencies other than the dollar and yen.
September was also a very good month for equities. Most of the third-quarter gains in U.S. stocks occurred in the final month. Japan’s Nikkei gained 6.2% in September but closed with a minuscule net change for the quarter. The S&P and Nasdaq advanced over 10% in the quarter, and so did the British Ftse. Stocks tend to lead real economic activity by about six months. Analysts are looking for U.S. GDP to advance less than 2% annualized in the second half of 2010, and growth should decelerate in Europe and Asia. Stocks seems to be anticipating a significant pick up of activity in 2011, even though some economists worry that even more momentum could be lost early next year.
Oil prices climbed over 10% in September, more than reversing the net drop between end-June and end-August. Precious metal prices have been well-bid but not as much so as equities.
Long-term interest rates rose 4 basis points on balance last month in contrast to drops of 35-40 basis points in Germany, Britain, and Canada. During the third quarter, in contrast, the 3-month rate fell by 24 basis points, while those in Canada and Euroland rose 41 basis points and 14 basis points. Rate levels reflect meager growth expectations in the short run and a greater risk of disinflation than inflation in the medium term.
| 10-Yr Yield | 09/30/10 | Chg vs End-August | Chg vs End-June |
| U.S. | 2.51% | +4 Basis Points | -42 Basis Points |
| Germany | 2.28% | -39 | -30 |
| Japan | 0.94% | -13 | -15 |
| U.K. | 2.95% | -37 | -40 |
| Canada | 2.74% | – 36 | -33 |
| Switzerland | 1.37% | -13 | -16 |
| 3-month euros | |||
| U.S. | 0.29% | -1 Basis Point | -24 Basis Points |
| Euroland | 0.85% | +2 | +14 |
| Japan | 0.22% | -1 | -2 |
| U.K. | 0.73% | 0 | 0 |
| Canada | 1.25% | +24 | +41 |
| Swiss | 0.18% | +1 | +7 |
| FX | Pct Chg in USD | Pct Chg in USD | |
| EUR/USD | 1.3637 | -7.1% | -10.3% |
| USD/JPY | 83.51 | -0.8% | -5.6% |
| USD/CHF | 0.9824 | -3.3% | -8.9% |
| GBP/USD | 1.5716 | -2.4% | -4.9% |
| AUD/USD | 0.9668 | -7.9% | -13.1% |
| NZD/USD | 0.7339 | -4.7% | -6.7% |
| USD/CAD | 1.0290 | -3.5% | -3.4% |
| USD/CNY | 6.6940 | -1.7% | -1.3% |
| Equities | Pct Change | Pct Change | |
| S&P 500 | 1141 | +8.8% | +10.7% |
| Nasdaq | 22369 | +12.1% | +12.3% |
| Djia | 10788 | +7.7% | +10.4% |
| Dax | 6229 | +5.1% | +4.4% |
| Nikkei | 9369 | +6.2% | -0.1% |
| Ftse | 5549 | +6.2% | +12.9% |
| Canada TSE | 12369 | +3.9% | +9.5% |
| Swiss SMI | 6296 | +1.9% | +2.7% |
| Commodities | Pct Change | Pct Change | |
| Oil, $ per brl | 79.97 | +11.2% | +5.3% |
| Gold, $ per oz | 1308.35 | +4.9% | +5.3% |
Copyright Larry Greenberg 2010. All rights reserved. No secondary distribution without express permission.
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