Some key highlights: Week 27 September – 01 October 2010

Some key highlights:  Week 27 September – 01 October 2010

• US T-Bond 10 year yield: 2.535% (last Friday 2.537%)
• MSCI: 1,179.19 (week -0.32%, YTD -0.86%)
• WTI Crude $: 80.39 (week 5.34%, YTD -5.56%)
• GOLD $/Oz: 1,320.70 (week +1.76%, YTD +17.70%)
• Dollar Index: 78.384 (week -1.10%, YTD +0.95)

This week, the House of Representatives approved a bill letting US companies seek compensation for imports from misaligned exchange rates, giving the Commerce Department the power to impose tariffs on goods coming from China. The 348 to 79 majority could thereby very well have escalated the on-going competitive devaluation or “currency war” into a US/China trade war. Treasury Secretary Timothy Geithner later tried to play down the danger and the effect of the bill, understandable, as the fragile global economy very well could slip back into recession if a trade war commenced.

Today, the US dollar fell to its lowest level since March versus the euro, touching the EUR/USD 1.3773. The dollar depreciation is due to massive sell-offs’ as

investors fear the Fed’s upcoming quantitative easing. Gold, trading inverse the falling US dollar, also set a new record today when the price touched 1,320.70 $/oz.

The very important ISM manufacturing Index was just released for September. The gauge came out slightly lower than expected 54.4 vs. 54.5 from 56.3 a month earlier.

September 2010 turned out to be the best September on Wall Street since 1939, as the Dow Jones Industrial Average climbed 7.7% during the month, and the old Index gained more than 10% in the 3^rd quarter. McKinsey & Co., the global management consulting firm, have recently published their survey; Economic Conditions Snapshot, September 2010, which indicates that the world economy remains in recovery. Of all respondents, the survey received responses from 2,056 executives worldwide, 51% says the world economy is in a recovery, up from 44% in June.

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September 2010 delivered slightly better economic data than expected, which has resulted in a sentiment shift that carried risky assets higher all around the world. In Peru, the general index rose 16.63% during September, in England the FTSE 100 Index climbed 4.43% and in the Philippines the national PSEi Index with more than 14.43%.

All in all, September 2010 proved the old prejudices wrong – we now hope for the same in October.