Unit­ed States: Dur­ing the week end­ed Au­gust 12, eco­nom­ic da­ta on con­sumer con­fi­dence, job­less claims and re­tail sales were re­leased. Based on con­flict­ing da­ta and a tense glob­al land­scape, the mar­ket was ex­treme­ly volatile, with both the S&P 500 and Dow Jones in­dices ex­pe­ri­enc­ing back and forth swings in gains and loss­es that were his­toric in their im­mense pro­por­tions. On Au­gust 9, chair­man of the Fed­er­al Re­serve, Ben Bernanke, firm­ly as­sert­ed that in­ter­est rates would re­main at their cur­rent lows of 0.25 per cent un­til the mid­dle of 2013. He stressed that the Fed would use the ex­ten­sive range of pol­i­cy tools it pos­sessed in or­der to achieve sta­bil­i­ty in the mar­ket.

This an­nounce­ment prompt­ed a rise in US eq­ui­ties, a surge in Trea­sury de­mand and a rise in the US$ against the eu­ro. In­vestors are now wait­ing for the Jack­son Hole Con­fer­ence on Au­gust 26, which may give some in­di­ca­tion as to a pos­si­ble QE3 in the form of an as­set pur­chas­ing pro­gramme. In terms of eco­nom­ic da­ta re­leas­es, the trade deficit for Ju­ly widened to US$53.1 bil­lion from US$50.2 bil­lion. This al­most six per cent in­crease was a re­sult of low­ered ex­ports as over­seas de­mand for every­thing from agri­cul­tur­al com­modi­ties to man­u­fac­tured prod­ucts fell. With the slow­ing growth in Chi­na, Japan­ese re­ces­sion and Eu­ro­zone debt cri­sis, it is pos­si­ble that the deficit may widen even fur­ther in the short term.

Ini­tial job­less claims fell from 402,000 to 395,000, while con­tin­u­ing claims fell from 3,748,000 to 3,688,000. This move­ment was due to lack of both fir­ing and hir­ing. The un­em­ploy­ment rate re­mains at 9.1 per cent. Ad­vance re­tail sales for Ju­ly rose from 0.3 per cent to 0.5 per cent, the best seen in four months. How­ev­er, con­sumer con­fi­dence fell from 63.7 to 54.9 for Au­gust; the up­wards swing of the mar­ket in re­sponse to the pos­i­tive re­tail sales saw an­oth­er sharp cor­rec­tion with this new in­for­ma­tion.

De­spite a down­grade by S&P, US Trea­suries con­tin­ued to be re­gard­ed as a "safe haven." On Au­gust 9, an auc­tion saw ten-year bonds at in­tra­day lows of 2.05 per cent and a close of 2.11 per cent.

Both the ten- and 30-year bonds were bought heav­i­ly in the first part of the week. Once the FOMC de­ci­sion on rates was de­clared, there was some down­ward pres­sure on Trea­sury prices, but yields re­main be­low 2.3 per cent. Briefly, 30-year bonds saw a sur­pris­ing sell-off mid-week, but ral­lied to­wards the end of the week. For the week Au­gust 15-19 Au­gust, re­leas­es on man­u­fac­tur­ing, hous­ing, im­ports and in­fla­tion are ex­pect­ed. Man­u­fac­tur­ing, hous­ing and im­ports are all ex­pect­ed to weak­en, con­tin­u­ing in cur­rent trends. While in­fla­tion re­mains a prob­lem for many oth­er coun­tries, the US's stance on rates sug­gests that it is not too ex­pec­tant of a per­ti­nent in­crease.

Eu­rope:

Fol­low­ing the re­sump­tion of the ECB's Se­cu­ri­ties Mar­kets Pro­gramme, var­i­ous es­ti­mates sug­gest that the ECB would have pur­chased any­where be­tween five bil­lion eu­ro and 50 bil­lion eu­ro in Ital­ian and Span­ish debt dur­ing the week of Au­gust 7, 2011. The ECB was forced to in­ter­vene as the yields on Ital­ian and Span­ish debt soared over con­cerns of the in­debt­ed­ness of eu­ro-zone mem­bers. Spain and Italy have a to­tal of 2.2 tril­lion eu­ro of out­stand­ing debt, com­pared with 630 bil­lion eu­ro for Greece, Ire­land and Por­tu­gal. With the re­vised Eco­nom­ic Fi­nan­cial Sta­bil­i­ty Fund (EFSF) yet to re­ceive ap­proval, it is ex­pect­ed that the ECB would have to re­main in the mar­ket with spec­u­la­tion that the ECB might have to spend up to 100 bil­lion eu­ro on Ital­ian and Span­ish bonds.

Con­cerns have been voiced over the pos­si­bil­i­ty of in­creased in­fla­tion­ary pres­sure as the ECB buys debt, there­fore, in­ject­ing liq­uid­i­ty in­to the sys­tem, with­out re­ab­sorb­ing an equiv­a­lent amount. The on­go­ing con­cerns in the eu­ro-zone have caused an ap­pre­ci­a­tion of the Swiss Francs (CHF) in re­cent months as in­vestors flocked to the per­ceived safe­ty of Switzer­land. In or­der to com­bat this ap­pre­ci­a­tion, the Swiss Cen­tral Bank an­nounced that a tem­po­rary Swiss Franc peg is "with­in the range of op­tions that pol­i­cy mak­ers could use." Pri­or to the an­nounce­ment, the Swiss franc al­most achieved par­i­ty with the eu­ro, with a year on year ap­pre­ci­a­tion of 25.13 per cent against the eu­ro, but has since ex­pe­ri­enced some de­pre­ci­a­tion pres­sures.

Cred­it rat­ing changes:

Brazil:

Brazil's long-term for­eign cur­ren­cy rat­ing was up­grad­ed by Rat­ing & In­vest­ment In­for­ma­tion (R&I) from BBB- to BBB on Au­gust 11, 2011. The rat­ings agency cit­ed Brazil's ro­bust do­mes­tic mar­ket, re­duced in­fla­tion­ary pres­sures and lim­it­ed risk from the ex­ter­nal en­vi­ron­ment due to Brazil's eco­nom­ic and fis­cal man­age­ment as the ma­jor rea­sons for the up­grade.

Week­ly In­ter­na­tion­al Eq­ui­ty Watch

US stocks see most dai­ly re­ver­sals over four days

The S&P 500 in­dex re­mained rel­a­tive­ly flat week-on-week as at Au­gust 12, falling mar­gin­al­ly by 1.72 per cent to a close of 1,178.81. This close was 5.30 per cent high­er than the week­ly low seen on Au­gust 8, the first trad­ing day to fol­low the US down­grade by Stan­dard and Poor's (S&P). The day-by-day move­ment in the in­dex re­flect­ed the volatil­i­ty in the mar­ket as the S&P 500 in­creased and de­creased by five per cent on av­er­age for each con­sec­u­tive day of the first four days of the week.Fol­low­ing a 6.70 per cent dai­ly de­cline in the S&P 500 on Au­gust 8 fol­low­ing the US down­grade, the mar­ket rose 4.7 per cent fol­low­ing the Fed's an­nounce­ment to keep rates near ze­ro through to 2013.

The in­dex fell 4.4 per cent and rose 4.6 per cent, re­spec­tive­ly, in the days to fol­low as mixed eco­nom­ic da­ta on re­tail sales and con­sumer con­fi­dence hit the mar­ket. Blue-chip stocks fol­lowed a sim­i­lar trend with the Dow Jones in­dex down 1.53 per cent to 11,269 from the week be­fore. While the "ex­cite­ment" sur­round­ing the ex­ten­sion of the US debt ceil­ing and the down­grade have some­what sub­sided, the fun­da­men­tals of the US econ­o­my re­main weak, mak­ing un­cer­tain­ty the on­ly cer­tain­ty sur­round­ing the di­rec­tion of the stock mar­ket.

Eu­ro­pean stocks de­cline for third straight week

Con­cerns over the US debt down­grade and the re­gion's debt cri­sis spread­ing to coun­tries such as France, weighed heav­i­ly on the Eu­ro­pean stock mar­ket. The Stoxx 600 Eu­rope in­dex hit a one-year low of 223.50 dur­ing the week of Au­gust 12 and record­ed a mar­gin­al week­ly de­cline of 0.58 per cent main­ly due to the bans im­posed on short-sell­ing by France, Spain, Italy and Bel­gium, which sta­bilised mar­kets. Ger­many's Dax in­dex closed 3.82 per cent low­er for the week to 5,997.74 while Unit­ed King­dom's FTSE 100 was up 1.39 per cent to a close of 5,320.03.

Asian stocks fall with con­cerns over mut­ed eco­nom­ic re­cov­ery

Con­cerns about the glob­al re­cov­ery fol­low­ing the US debt down­grade and Eu­rope's loom­ing debt cri­sis sent the MSCI Asia Pa­cif­ic In­dex 3.30 per cent low­er to a close of 121.92. Hong Kong's Hang Seng In­dex closed the week at 19,620, down 6.33 per cent, while Chi­na's Shang­hai Com­pos­ite In­dex lost 33.25 points to a close of 2,593.17.

T&T stock mar­ket:

TTSE Com­pos­ite In­dex con­tin­ues its ad­vance

The Com­pos­ite In­dex in­creased dur­ing the week end­ing Au­gust 12, ris­ing by 0.76 per cent to a val­ue of 976.42 as 10 stocks ad­vanced and 11 de­clined. Na­tion­al Com­mer­cial Bank Ja­maica Ltd (NCBJ) was the week­ly vol­ume leader with 252,652 shares trad­ing with a clos­ing price of $2.05, mark­ing a 5 cents in­crease in the price. Ja­maica Mon­ey Mar­ket Bro­kers (JMMB) saw the largest price ap­pre­ci­a­tion ris­ing by 12.82 per cent dur­ing the week to a close of $0.44. Year-to-date, the TTSE Com­pos­ite In­dex is up 16.85 per cent.

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