Stock markets were little changed as US consumer prices posted their first annual decline since 1955. Trader John Cetera of Hamilton Executions on the floor

Hopes of a [...]]]> The fledgling recovery in the US housing market appears to have stalled, reducing the chance of President Barack Obama’s “glimmers of hope” turning into green shoots any time soon.

Stock markets were little changed as US consumer prices posted their first annual decline since 1955. Trader John Cetera of Hamilton Executions on the floor

Hopes of a recovery were also damped down as the US registered its first year-on-year fall in inflation for more than half a century in March, due to falls in energy prices.

Recovery of the housing market is central to the recovery of the US economy, and the latest data puts paid to comments this week by President Obama that he saw “glimmers of hope” in the economy. His views were largely based on earlier housing surveys.

The number of US citizens losing their homes leapt by 44pc last month, as banks pursued delinquent borrowers after federal mortgage lenders Fannie Mae and Freddie Mac lifted temporary bans on foreclosures. A survey by Foreclosures.com found that 175,199 homes were repossessed by lenders in March.

In spite of major banks promising to work with troubled mortgage holders to keep them in their homes, almost 370,000 families have lost their homes so far this year.

Mortgage applications also fell last week for the first time in more than a month, suggesting that even with borrowing costs at record lows, potential house buyers are staying out of the market.

The bearish outlook was compounded by the Federal Reserve’s Beige Book, which provides an assessment of regional economic activity. It said the US economy continued to weaken in March – albeit at a slower rate – and found that the housing market remains “depressed overall”.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

The plan involves the US government buying up toxic assets held by banks which will allow the banks to free up their balance sheets. At the moment the debt sits with the banks and [...]]]> Markets are on a positive feel following yesterdays outline by Tim Geithner on the Public Private Investment Program in the US.

The plan involves the US government buying up toxic assets held by banks which will allow the banks to free up their balance sheets. At the moment the debt sits with the banks and they cannot sell it on or value it, therefore the scheme aims to remove this and hopefully by doing this remove the chains that are preventing lending.

President Obama noted that the plan was a vital step but also reaffirmed that there was a “long way to go”. Wall Street experienced a significant rally; the Dow Jones gained nearly 500 points in yesterday’s session.

Data released today from the UK showed that the Retail Prices Index (RPI) fell to 0% in February from 0.1% in January- this is the lowest reading since 1960 but can be largely attributed to the fall in mortgage repayments following sharp interest rate cuts.

Another inflation indicator the Consumer price Index (CPI) rose unexpectedly to 3.2%- this could be a concern to the Bank Of England as interest rates have been slashed and Quantitative Easing introduced on the premise that inflation would continue to fall, however it does reduce the fear of deflation setting in.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

The hot-headed and unfairly retroactive changes could hurt investor confidence, undermine President Barack Obama’s credibility and damage the still valuable US finance sector.

AIG has been especially irresponsible, both with its risk-taking during the credit [...]]]> Outraged US legislators are pushing through punitive taxes on bonuses not just at AIG but at all recipients of government funds.

The hot-headed and unfairly retroactive changes could hurt investor confidence, undermine President Barack Obama’s credibility and damage the still valuable US finance sector.

AIG has been especially irresponsible, both with its risk-taking during the credit boom and with its handling of its affairs since. Agreeing to extra bonuses and then paying them to employees of its financial products unit after receiving $170bn-plus in government money – and failing to sufficiently forewarn Congress and others to boot – has rightly riled Americans and their elected representatives.

Plans to tax bonuses at financial institutions that have been bailed out by the US government are the knee-jerk result. The scheme passed on Thursday in the House would result in taxes of 90pc on bonuses at institutions that have received funds from the government; in the Senate, which now has to consider the measures, thinking seems to be 35pc levied on the employer, and an extra 35% on the employee.

The bonus tax idea is bad for a range of reasons that senators should consider calmly, even if the House didn’t do so. One is that it changes the rules – again – for recipients of government assistance.

Government initiatives to kick-start clogged financial markets depend on investors and institutions participating. If they think that the rules of the game are going to change continually, they’ll be reluctant.

The tax plans are also retroactive to the beginning of this year. Bankers awarded bonuses for 2008 – and some payouts were both relatively modest and legitimately earned – received them earlier this year, net of prevailing taxes. They may in good faith have spent the cash, invested it or even given it away.

Changing the rules now, and demanding a giant additional tax cheque, really isn’t fair.

Even more importantly, there’s the longer-term impact on the US financial industry. Wall Street’s finest, together with AIG – admittedly a different beast – are now in the doghouse together. But the finance business is in fact one of America’s global strengths.

The planned taxes are just the kind of thing that will give non US firms and non US bankers an edge.

That’s just one example of the crossed wires inherent in the latest tax plans. And with so many bigger issues at hand, it’s surely the kind of risk to credibility that Congress should make sure it avoids.

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He again highlighted that the US economy still faces further contraction, however he intimated that the US government would not move to nationalize US [...]]]> Following dreadful US consumer confidence data earlier in the day the Dow posted a 2% rise, this after Bernanke testified to the Senate on the health of the US economy.

He again highlighted that the US economy still faces further contraction, however he intimated that the US government would not move to nationalize US banks as this would lose value already built into banks. On the back of this there was an expected jump in bank stocks and this was the main driver for the gain in the Dow.

President Obama addressed congress for the first time yesterday and again stressed the severity of the economic crisis; he vowed to put a stop to wasteful spending and vowed that banks and bankers taking public funds would be held accountable.

He also reaffirmed his plan to cut the spiraling deficit which is becoming a huge problem for the US economy and will weigh on the dollar if not significantly reduced. Overall his address offered hope and determination for recovery as he vowed “we will build, we will recover”, lets hope so!

Yesterday in Europe we saw the German Ifo survey come more or less in line with expectations, today saw GDP come in exactly as expected at -2.1%. In the UK 4th quarter GDP was actually a touch better than expected showing a contraction of 1.5%, however taken in context this brings the year on year to -1.9% which is an 18 year low and reinforces the sharpness of the slowdown.

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What we did see was more negativity in the equity markets as the Dow fell to the 2002 lows below 7300 amid fears that the US [...]]]> Last week although the currency markets were choppy, we did not see a significant break out of the current ranges for the main protagonists- GBP/USD, EUR/USD and GBP/EUR.

What we did see was more negativity in the equity markets as the Dow fell to the 2002 lows below 7300 amid fears that the US government will raise their stake in Citigroup and Bank of America- a step closer to nationalization which has raised concern for investors.

On the back of this the USD is showing the strain and we have seen a move higher on GBP/USD and EUR/USD reversing the dollar strength we saw last week.

Looking to the week ahead the main data to look out for will focus on releases from Europe and the US. Tomorrow we have the German IFO survey and Wednesday we see GDP data from Germany- the IFO survey will give an early indicator of current business expectations and sentiment and Wednesdays GDP will give a statistical measure of German economic activity and health. It is expected that the GDP will show a further contraction of the previous -0.5%.

It will be interesting to compare the German GDP to that of UK GDP released later in the morning on Wednesday- again we expect to see a further contraction from the previous -0.6%.

In the US GDP data released on Friday and tomorrow Ben Bernanke the fed governor will testify on the current state of the US economy and the US dollar. Also of note is Obama’s summit on the US deficit.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

Today and tomorrow we have the G7 meeting in Rome and the recent weakness in the pound is expected to be a confrontational topic.

Following Wednesday’s Bank Of England inflation report the expectation is that UK interest [...]]]> Following another rollercoaster week in the currency markets we have seen the Pound rally and then submit its gains.

Today and tomorrow we have the G7 meeting in Rome and the recent weakness in the pound is expected to be a confrontational topic.

Following Wednesday’s Bank Of England inflation report the expectation is that UK interest rates will be cut to or towards 0% mirroring that of the US and also that quantitative easing may be used to further stimulate the economy.

We witnessed a distinct sell off in the pound in the aftermath and this negativity is incensing European nations as their exporters suffer in favour of cheaper British goods.

Today we have seen GDP data from Germany showing a larger than expected contraction of 2.1% and following this we have seen EMU GDP contract by 1.5%- this is the deepest contraction on record and emphasizes today’s contraction in Germany with Spain, France & Italy also posting negative GDP.

This is worrying news from the Eurozone and there is little light at the end of the tunnel- GDP is expected to fall by 3% in 2009.

So we have deepening recessionary trends in the UK and the Eurozone…however in the US retail sales rose by a bullish 1% yesterday. The market was quick to play this down but nonetheless this is an unexpectedly strong number- does this suggest a glimmer of hope?

Today we have the Michigan consumer sentiment from the US- will this show a positive reading after the Obama feel good factor?

Looking at the market fluctuations we have understandably witnessed lots of volatility- this morning we have already seen early gains in the pound against the dollar and the euro.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

It has a fancy title within it, the Financial Stability Plan and the Public-Private Investment Fund (ie Bad Bank) but little else besides.

The ideas are similar to those proffered by the widely lampooned ex Treasury Secretary Paulson and the methods to be [...]]]> Geithner unveilled absolutely nothing new with regards to the Obama Administration’s financial rescue package.

It has a fancy title within it, the Financial Stability Plan and the Public-Private Investment Fund (ie Bad Bank) but little else besides.

The ideas are similar to those proffered by the widely lampooned ex Treasury Secretary Paulson and the methods to be used to achieve the objectives as absent as ever. It is hard to see how or why private sector funds would rush to buy an ocean of toxic assets that are still difficult or impossible to value without there being some form of Government guarantee as to their minimum worth.

So the US Banking fiasco remains well up the muddy creek with only the promise of a paddle somewhere down the line. Equity markets hated Geithner’s pronouncements and there was a rush by currency markets into risk averse mediums, primarily the US Dollar and gold.

Yesterday’s Government funding operations went reasonably well with a warm reception for the UK Gilt auction and strong demand for the US Treasury’s 3-year note sale.

The latter went some way to assuage worries about overseas appetite for US Government securities, with federal borrowing expected to surge. Following the Dutch offering yesterday we get a further offering of the 10-year bund out of Germany today.

This bond is the same one that was badly received by the market in January so this round’s reception will be awaited with interest.

Elsewhere, the Riksbank in Sweden reduced their official interest rates by a full 1% down to 1% citing a continuing depreciation of the Swedish economy and prospects considerably worse than they had predicted last December.

This cut was greater than had been expected by both cash and futures markets and has caused the Krona to weaken sharply against the Euro. Not that the Euro is immune to the prospects of lower rates following comments from ECB member, Gonzales-Paramo who, following on from the winding up of the Ecofin meeting stated that 2% not lowest rate for the currency. He added that he sees a further inflation fall in the short term.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

Attention therefore was firmly fixed on any mention of more innovative easing initiatives and also the mood of the accompanying statement. [...]]]> With a target Fed Funds Rate ( the rate at which The US major Banks are able to borrow overnight Dollars) already at a 0 – 0.25% level, further cuts are nigh on impossible.

Attention therefore was firmly fixed on any mention of more innovative easing initiatives and also the mood of the accompanying statement. The Fed did not specifically announce a programme of longer term asset buying as part of a shift towards quantitative easing but just confirmed that the current low levels of interest rates were going to be with us for some time to come.

Their prognosis for the economy therefore remains every downbeat with little sign yet of any move towards recovery.

Market opinion therefore is that the previously discussed plan to create an entity to buy a lot of the toxic assets held by US Banks will gather momentum and as long as the Price Is Right, this should free up additional cash for those Banks to lend on to the Corporate Sector.

Still a lot of work to be done here.

One piece of good news out overnight was that the $ 800 billion stimulus package cleared the first hurdle (Congress) on its tortuous route to becoming a real injection. The dark cloud was that not one Republican member voted in favour.

It looks as though Obama is going to have a real battle if he is determined to have these measures approved across the political spectrum. The Dollar and Wall Street however both took heart with the currency making strong gains across the board.

Today sees the auction of $ 30 billion of 5-year notes – a massive amount but it will be vital for the rest of the programme that the sale goes well.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

Everything that emerged yesterday pointed to a continuation in rate reduction with the lowly levels being maintained through the time horizon. Added to this, Quatitative Easing has raised its profile once again.

Yesterday we saw further weak economic data from the Eurozone prompting [...]]]> Yields are again the major contributor to the loans calculators debate this morning.

Everything that emerged yesterday pointed to a continuation in rate reduction with the lowly levels being maintained through the time horizon. Added to this, Quatitative Easing has raised its profile once again.

Yesterday we saw further weak economic data from the Eurozone prompting one ECB member, Constancio, to call for a pre-emptive rate cut from the Central Bank – possibly at the same time as the MPC decision tomorrow.

We also had a look at the minutes from the last FOMC meeting in which the Committee made it very clear that they intended to keep US interest rates ‘very low’ for an extended period (very low meaning a Fed Funds target rate of zero – 25bp) but focused much more on the ongoing weak state of the economy coupled with the escalating budget deficit and its implications going forward.

Barack Obama underlined this concern when he warned that this year’s budget deficit could break through a record $1,000bn – more than double last year’s shortfall – and remain above that level “for years to come”.

This obviously implies that although official rates will stay close to zero, there will be a requirement to maintain some reasonable degree of return on Treasuries in order to provide an incentive to foreign investors to keep funding the US.

The current 10-year US Government Bond yields about 2.50% and this looks likely to be maintained. The BIG declines in yields are likely to be seen in the Eurozone, Canada and (of great concern to Alistair Darling) the UK.

Given the huge future funding requirement by the UK via gilt issuance, a sharp reduction in long term yields is exactly not what the Chancellor would look for. Indeed the Times this morning were talking of investors preferring the much more attractive returns on offer from Top Rated Corporate Bonds going forward.

And this yield scenario, loan calulator feels, will determine the immediate outlook for currencies in the exchange market with the US Dollar gaining, or at least holding on to recent gains, against the other major currencies.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.