US Stocks Climb on CPI figures
The S&P has rebounded from its largest drop since August as slower than expected inflation has helped to quash critics arguments against the Fed’s recent stimulus. This is a form of a relief bounce that has been caused by the lack of news and data coming from Europe and China and the slower than expected CPI figures. The US stock market has been falling on recent news of the debt crisis in Europe and concern that China will act to slow its economy.
US Home starts have dropped more than expected indicating that builders in the US have started work on fewer homes than forecast in October. The US housing sector is clearly still suffering and undermining confidence in the US. Record low mortgage rates have failed to boost demand as unemployment in the US hovers at 10%. The consumer price index increased 0.2% after a 0.1% rise in last months announcement.
EU and IMF analysts will scour the balance sheets of Ireland banks in Dublin tomorrow in order to develop a better picture of how serious the situation is. The fiscal crisis in Europe is clearly widening and it seems that most economists think a bail out will be necessary to sure up the flailing economy. The assessment will determine whether Ireland will be left alone to patch up their financial sector or will need to fall back on the rescue fund available from the EU and IMF.
The British pound rallied to 1.5936 today as the economic docket re-inforced the outlook for the UK economy looking forward to next year. The Bank of England policy meeting minutes showed the MPC voted 7-1-1 to maintain its current policy in November, with Sentance as usual pushing for a 25bp rate hike and Posen pushing for the central bank to expand QE by another GBP 250B given the ongoing slowing of the Uk economy.
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