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May 16: Consumer sentiment falls in May to lowest since 1980

Source: MarketWatch

Washington -- Consumer sentiment dropped in May to its lowest level since 1980, according to a Friday report, as higher fuel and food prices, coupled with declining home values, weighed on financial expectations. The U.S. consumer sentiment index in May fell to 59.5 from 62.6 in April, according to a Friday report from University of Michigan/Reuters. Economists surveyed by MarketWatch were looking for a result of 61.0.

The expectations index fell to 51.7 -- the lowest level since 1990 -- from 53.3 in April. And the current conditions index declined to 71.7 -- the lowest level since 1980 -- from 77.0 in April. The expectations reading leads spending, according to Ian Shepherdson, chief economist for High Frequency Economics. He expects a decline of 1% in on-year real consumption by the summer if these levels are sustained. "In short, there is not so much as a sniff of a hint of recovery here; the data continue to deteriorate," Shepherdson wrote. "Gas and food prices are the biggest drivers of inflation expectations, so don't expect a peak until late summer." See full story.

May 15: First readings show factory activity contracts in May

Source: Marketwatch

Washington -- The first indication of manufacturing activity in the Northeast and Mid-Atlantic region showed that factory activity was contracting in May, according to reports from the Federal Reserve Banks of New York and Philadephia on Thursday. The New York Fed's Empire State Manufacturing index fell to a reading of negative 3.2 in May from a positive 0.6 in April In Philadelphia, factory activity rose to negative 15.6 in May from 24.9 in April. Readings below zero indicate contraction.

The Empire State report for May was markedly weaker than expected -- economists had been expecting it to be essentially flat with April - while the Philadelphia region was substantially better than expected -- eonomists saw only a small improvement to negative 21.0. The Empire State index and the Philadelphia survey are of interest to traders primarily because they are seen as precursors of what the national Institute for Supply management factory survey for May, due out in two weeks, will show. The ISM factory index contracted in April for the third straight month. In addition, the Fed reported earlier Thursday that industrial output fell sharply in April. See full story.

May 14: Gold futures drop over $19 in three sessions

Source: Marketwatch

San Francisco -- Gold futures closed lower Wednesday taking the metal's three-session loss to more than $19 an ounce after the Labor Department reported that U.S. consumer inflation moderated in April Gold for June delivery fell $3.10 to close at $866.50 an ounce on the New York Mercantile Exchange. It touched an intraday low of $864. The contract has now suffered a drop of $19.30, or 2.2%, since the end of last week.

"Despite the big picture fundamentals remaining extremely favorable to gold, it is finding it hard to get traction after this most recent sharp sell off," said Mark O'Byrne, a director at Gold and Silver Investments Ltd. "Periods of consolidation are common after such sharp sell offs and this type of sideways movement can often frustrate bulls and bears alike, prior to the market reasserting its primary trend," he said in emailed comments. And it's primary trend is "likely to be up as none of the fundamental macroeconomic, geopolitical and geological issues driving the gold markets have been resolved," he said. See full story.

May 14: A CPI report that only an economist could love

Source: MarketWatch

Boston -- American consumers are supposed to be cheered up by news that, excluding food and energy prices, the core consumer price index gained just 0.1% in April. Indeed, that would be good news -- if we didn't have to eat anything or drive anywhere.

In the real world, it's not just that consumer prices rose 0.2% for the month, factoring in food and energy. It's that it feels like money is flying out the door on everyday expenses. For the last 12 months, we've seen consumer prices increase almost 4%. After years of not feeling much pinch from inflation, consumers are now staggered by how hard the economy is hitting their day-to-day budgets. The latest numbers from the Labor Department may suggest that gasoline prices have fallen in recent weeks, but the numbers on most consumers' gas-station credit-card statements say something different. Those close-to-home numbers are the ones that count. See full story.

May 13: Financial markets still out of whack, Bernanke says

Source: Marketwatch

Washington -- Despite some signs of improvement, financial markets remain severely stressed, Federal Reserve Chairman Ben Bernanke said Tuesday. The U.S. central bank's efforts to provide cash to financial markets have helped, Bernanke said, citing a lessening of pressure on brokerage firms, better conditions in the Treasury repurchasing market and a return of liquidity to several other markets. "These are welcome signs, of course, but at this stage conditions in financial markets are still far from normal," said Bernanke in a speech prepared for a conference on financial markets sponsored by the Federal Reserve Bank of Atlanta.

To illustrate his point, Bernanke said that a number of markets based on securitization of assets "remain moribund" and that risks spreads remain high, including the London interbank offered rate, or Libor rate. The Fed has flooded financial markets with cash in order to lower short-term lending rates, such as the Libor. While the effort has had some success, it has not achieved its ultimate goal, Bernanke said. See full story.

May 12: Economy still weakening, data expected to show

Source: Marketwatch

Washington -- Key sectors of the U.S. economy were slowing in April and early May, economists said ahead a very busy week for economic data. "The economy is far from being 'out of the woods,'" wrote Brian Bethune and Nigel Gault, economist for Global Insight. The economic indicators in the coming week will show "an economy that is still struggling."

The data will cover all the main parts of the economy: Consumer spending, manufacturing, housing and inflation. Consumer spending, industrial output and homebuilding are all expected to weaken further, pushing the economy deeper into recession territory. Consumer prices are expected to show the steady and discomforting increases that will keep the Federal Reserve from cutting interest rates again soon. See full story.

May 9: Crude rallies on to record high above $126 a barrel

Source: Marketwatch

New York -- Crude-oil futures blitzed past the $126 a barrel mark Friday, rallying to a record high of $126.20, pushed higher by weakness in the U.S. dollar and concerns over supply disruptions. Crude oil for June delivery was last up $2.18 at $125.87 a barrel on the New York Mercantile Exchange. The contract earlier rallied to a record high of $126.20 a barrel.

"Another rocking day," said Phil Flynn, a vice president at Alaron Trading. "There's a lot of bullish momentum right now and people are piling into oil, because it seems to be the best place to put your money.... Right now, the momentum for oil is very strong," Flynn said. See full story.

May 8: Crude futures slip, but remain in record territory

Source: MarketWatch

San Francisco -- Crude-oil futures edged lower Thursday, but remained firmly in record territory as traders' insatiable appetite for energy futures continued on the heels of ongoing global supply concerns. Crude oil for June delivery edged 8 cents lower to $123.45 a barrel on the New York Mercantile Exchange, after touching a high of $123.90. The contract traded 53 cents lower at $123 in electronic trading. Earlier this morning, crude soared to a record high of $123.93 in electronic trade, exceeding the intraday high of $123.75 hit on Wednesday.

"The surge in energy is being fueled by both technical and speculative interest, as both groups continue to pile into the markets on the back of continued concern about supply cutbacks," said Edward Meir, an analyst at MF Global, in a research note. "The buying interest is also evidenced by rising open interest readings, with yesterday's increase in WTI [West Texas Intermediate crude] up by 17,000 lots, bringing the two-day total to over 41,000 lots," Meir said. See full story.

May 7: Fed's Hoenig says inflation troublesome and too high

Source: Marketwatch

Denver -- A veteran U.S. central bank official said Tuesday he's worried about a deteriorating inflationary environment, and suggested that when the Federal Reserve begins to raise rates, it could do so swiftly. Federal Reserve Bank of Kansas City President Thomas Hoenig said rising inflationary pressures are "troublesome" and a "serious" matter, and now stand at "unacceptably high levels." He added, "the bigger concern is that these increases are beginning to generate an inflation psychology to an extent that I have not seen since the 1970s and early 1980s."

Hoenig fretted further that "there is a significant risk that higher inflation will become embedded in the economy and require significant monetary policy tightening to reduce it." He tied rising prices primarily to overseas factors, including a "sizable decline" in the U.S. dollar's value, and noted that given the long running rises in food and energy prices, he is increasingly focused on movements in overall inflation. Fed officials have long looked more closely at so-called "core" measures, which strip out food and energy moves, believing they predict future overall inflation rates more reliably. See full story.

May 6: Crude futures touch $122 as dollar weakens

Source: Marketwatch

San Francisco -- Crude futures reached a fresh record of $122 a barrel Tuesday as weakness in the U.S. dollar and global supply concerns fueled gains in oil prices for a third trading session. Crude oil for June delivery traded as high as $122 a barrel on the New York Mercantile Exchange. It was last up $1.68, or 1.7%, at $121.65. Crude's new record followed the previous session's record closing of $119.97 a barrel. The causes of the relentless climb in oil prices "have been chronicled repeatedly here -- demand from China and India, the falling dollar making oil an inflation hedge, speculation, OPEC supply restraints, supply threats in Iran, Iraq and Nigeria, and refinery bottlenecks in the U.S.," said John Kilduff, an analyst at MF Global, in a note to clients.

On the currency markets Tuesday, the U.S. dollar traded lower against most of its major rivals. The dollar index fell 0.4% to 72.77. A weak dollar makes oil more attractive as an investment alternative. "Adjusted for inflation, oil is now above the $101.70 peak hit in April 1980, the year after the Iranian revolution," said Kilduff. "Now we are in unexplored territory," he said "Add to it, the significant recent supply disruptions in Nigeria and additional inflationary pressures that surely must be the result of a loose monetary policy and the path of least resistance is higher still for energy markets." See full story.

May 5: Oil rallies on supply concerns, weak U.S. dollar

Source: Marketwatch

New York -- Crude-oil futures rallied more than 2% Monday, propelled higher by concerns about supply disruptions in Nigeria and weakness in the U.S. dollar. Crude oil for June delivery soared $2.43, or 2.1%, to $118.75 a barrel on the New York Mercantile Exchange in early morning trading.

"With last week's bullish headlines from the U.K. out of the way, Nigeria is the lingering hotspot the markets will be focusing on," said Edward Meir, an analyst at MF Global, in a research note. "The dollar is slightly weaker today against the euro, and is not pressuring energy, at least so far," Meir said. Nigeria's rebel group Movement for the Emancipation of the Niger Delta, MEND, said Sunday it was responsible for an attack on a Shell oil flow station in the south of the country, according to media reports. Shell confirmed the attack and said that some oil production had been closed down, according to reports. In recent months, MEND has claimed responsibility for a series of attacks on oil facilities in the Niger Delta. See full story.

May 2: Fed revs up lending in latest jolt to credit market

Source: Bloomberg

Washington -- The Federal Reserve, seeking to prevent a deeper economic slowdown, took another stab at coaxing banks into lending at lower rates.

The Fed boosted its biweekly Term Auction Facility sales of cash to banks by 50 percent to $75 billion and expanded the collateral it takes from bond dealers through loans of Treasury securities. It also raised the amount of dollars it makes available to the European Central Bank and Swiss National Bank through swap lines to a combined $62 billion from $36 billion.

Borrowing costs for banks have risen as much as 0.38 percentage point in the past six weeks, an increase that blunted the impact of the cash injections that began in December. The strains threatened to further impair mortgage markets, worsening an economy where growth has already stalled.

``The world is awash in liquidity, it just isn't reaching the right financial borrowers,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``Today's action from the central banks is another strong dose of medicine that will help cure what ails the credit markets.'' See full story.

May 1: U.S. initial jobless claims surge 35,000 to 380,000

Source: Marketwatch

Washington -- Erasing the drop reported in the prior week, first-time filings for state unemployment benefits surged 35,000 to 380,000 last week, the Labor Department said Thursday. That level is the highest seen since March. The prior week's claims were revised up by 3,000 to 345,000. The four-week moving average of initial claims fell 6,500 to stand at 363,750.

The level of average initial claims is consistent with a weak labor market, wrote John Ryding, chief U.S. economist for Bear Stearns. Economists say claims readings running consistently higher than 350,000 signal significant weakening in the labor market. Claims have been hovering near that level, albeit sometimes falling below it, for a few months now, exacerbating jitters about recession in the U.S. economy. See full story.

April 30: Dollar slightly lower after Fed decision

Source: Marketwatch

Washington -- The dollar was slightly lower against its major counterparts Wednesday, after the Federal Reserve cut interest rates 25 basis points as expected. The Fed cut short term interest rates on for the fourth time this year, lowering its benchmark federal funds rate by a quarter percentage point, to 2%. Rates stood at 4.25% at the start of the year. The Fed removed language that downside risks to growth remain, and added a suggestion that their other liquidity moves might help the economy. But the Fed statement showed that the central bank is still more worried about growth than it is concerned about inflation "This is a lot more dovish than I had expected," said Andrew Wilkinson, senior market analyst at Interactive Brokers.

The euro was lower but was holding its ground amid signs that inflationary pressures in the eurozone may be subsiding and businesses are growing gloomier about the economic outlook. The euro dipped slightly after Eurostat released its preliminary estimate of April consumer price inflation in the 15-nation eurozone. The agency estimated annualized CPI fell back to 3.3% in April after hitting a 3.6% rate in March. The consensus forecast was for an April rate of 3.4%. An easing of inflation pressures would be welcome at the European Central Bank, where officials have maintained a hawkish tone on interest rates in light of near-term price pressures and fears they could translate into entrenched inflationary expectations that would become difficult to root out. See full story.

April 29: Home prices plunge at faster pace in February

Source: Marketwatch

Washington -- The decline in U.S. home prices quickened in February, with prices down a record 12.7% in the past year for 20 key cities, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. In February, prices were down 2.6% compared with January for 20 key cities, with prices in the smaller 10-city index off 2.8%. That's the fastest monthly price decline in the history of the index. The pace of decline has accelerated for nine consecutive months. The 10-city index has fallen a record 13.6% in the past year.

"There is no sign of a bottom in the numbers," said David M. Blitzer, chairman of the index committee at Standard & Poor's. Prices in 19 of the 20 cities have fallen over the past year, with prices in all 20 cities falling month-to-month for six straight months. "House prices in big cities are in a freefall," wrote Patrick Newport, an economist for Global Insight. "We think it very likely that the plunge in home prices is a key driver of the collapse in consumers' confidence," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. In a separate report the Conference Board said its consumer confidence index fell to 62.3 in April, the lowest in five years. See full story.

April 28: Opec says oil could hit $200

Source: Financial Times

London -- Opec’s president on Monday warned that oil prices could hit $200 a barrel and there would be little the cartel could do to help. The comments made by Chakib Khelil, Algeria’s energy minister, came as oil prices continued to hover near $120 a barrel, putting pressure on the already struggling US economy. His comments suggest Algeria wants the Organisation of the Petroleum Exporting Countries to continue to resist calls by US and European leaders for the cartel to pump more oil.

But Mr Khelil blamed record oil prices on the weakness in the dollar and global political insecurity. He told El Moudjahid, Algeria’s government newspaper: “I don’t think that an increase in production would help lower prices, because there is a balance between supply and demand and the stocks of gasoline in the United States have recorded a surplus and are at their highest level for five years.” He added: ”The prices are high due to the fact of the recession in the United States and the economic crisis which has touched several countries, a situation which has an effect on the devaluation of the dollar, and therefore each time the dollar falls one percent, the price of the barrel rises by $4, and of course vice versa.” See full story.

April 25: Consumer sentiment plunges to 26-year low

Source: MarketWatch

New York -- High prices for food and fuel, weak income growth and falling home values pulled down consumer sentiment in April, according to a report released Friday. The U.S. consumer sentiment index declined to 62.6 in April -- the lowest level in 26 years -- from 69.5 in March, according to the latest gauge compiled by the University of Michigan/Reuters. Economists surveyed by MarketWatch were looking for a final April result of 63.0. An earlier estimate for April was 63.2.

"The recent acceleration in the loss in confidence indicates a longer and potentially deeper recession," according to Richard Curtin, survey director. "All households now anticipate smaller income gains and larger price increases, as just one-in-five now expect their overall finances to improve during the year ahead, the least favorable reading in more than a quarter century." The expectations index fell to 53.3 -- marking the lowest level since November 1990 -- from 60.1 in March. And the current conditions index in April declined to 77.0 -- the lowest level since November 1982 -- from 84.2 in March. See full story.

April 24: Platinum may hit $2,400 an ounce this year: GFMS

Source: MarketWatch

New York -- Platinum prices may soar to a new high of $2,400 an ounce this year, boosted by further supply disruptions from South Africa or a fresh break of gold prices over $1,000, London-based precious metals consultancy GFMS said Thursday. GFMS expects considerable volatility in the prices of platinum and palladium in 2008. It forecasts trading ranges between $1,700 and $2,400 for platinum, and between $400 and $550 for palladium.

"We would expect the higher end of these ranges to coincide either with further difficulties in South Africa or gold prices breaking strongly through the $1,000 level," GFMS said in its Platinum and Palladium Survey 2008, which was released on Thursday. "We remain positive for gold also and see this as a real possibility in 2008," GFMS said. See full story.

April 23: Foreign investors shun cheap US assets

Source: Financial Times

New York -- To the ire of many Americans, US assets are being sold to foreign investors at fire-sale prices courtesy of the beleaguered US dollar. That is the consensus, anyway, and one supported by the dollar’s 25 per cent decline on a broad trade-weighted basis since the start of 2002. True, the more the dollar slumps against the euro, yen and other currencies, the cheaper it is for foreign investors to snap up US assets. That’s the theory. But reality is far different.

Conveniently overlooked by the “America is being sold on the cheap” crowd is that foreign purchases of US assets have actually declined over the past six months. Rather than push deeper into the US, foreign investors are in retreat – a trend that should worry US legislators, not comfort them, since capital inflows are essential to the debt-laden, savings-deficient US economy. The weak dollar notwithstanding, US foreign direct investment (FDI) inflows declined 13.4 per cent in the fourth quarter of last year from the same period a year ago, and were only one-third the level of the prior period. On the M&A front, foreign purchase of US firms plunged roughly 25 per cent in the first quarter of from the same period last year. See full story.

April 22: Record-high crude nears $120 on supply concerns

Source: MarketWatch

San Francisco -- Crude-oil futures rose Tuesday to a new high of $119.90 a barrel as lingering worries over oil-supply disruptions and the dollar's new low against the euro provided support for prices. Crude for May delivery gained more than $2 to touch the new high in early afternoon trading on the New York Mercantile Exchange, surpassing $118.05 recorded overnight in electronic trading. The contract was last up $1.52, or 1.3%, to $119 a barrel. Crude's new intraday high followed on Monday's record closing price of $117.48 a barrel.

On the currency side, the dollar fell against the euro, with the euro-zone unit breaking the $1.60 level for the first time. Meanwhile, May reformulated gasoline rose 3.59 cents to $3.105 a gallon, and May heating oil gained 2.89 cents to $3.3403 a gallon. Natural gas for May delivery fell 5 cents to $10.68 per million British thermal units. See full story.

April 21: Crude hits $117.6 on weak dollar, Nigeria pipelines

Source: Marketwatch

San Francisco -- Crude-oil futures swung between gains and losses Monday, after soaring to a record high of $117.60 a barrel earlier in the session, as weakness in the U.S. dollar and concerns over supply disruptions underpinned prices. Crude oil for May delivery was down 42 cents to $116.26 a barrel on the New York Mercantile Exchange in early morning trading.

The Movement for the Emancipation of the Niger Delta, or MEND, said its members blew up two more oil pipelines in southern Nigeria, the Associated Press reported Monday. Crude hit the new record as "the dollar is down again and the Nigerian rebels MEND made good on their threats to have more attacks in Nigeria," said Phil Flynn, vice president of futures brokerage Alaron Trading. In the currency market, the dollar index, which tracks the greenback's performance against a basket of other major counterparts, dropped 0.5% to 71.59. The falling dollar increases the attraction of crude as an investment alternative and pushes up crude's dollar-denominated prices. See full story.

April 18: Crude closes at record, then touches $117

Source: Marketwatch

New York -- Crude-oil futures reversed earlier losses, rising nearly $2 a barrel on Friday to close at new record high of $116.69, as news about pipeline sabotage in Nigeria overtook the strengthening dollar to push up oil prices. The front-month contract hit $117 a barrel in electronic trading after markets closed. Crude oil for May delivery gained $1.83, or 1.6%, to settle at $116.69 a barrel on the New York Mercantile Exchange. It earlier fell to an intraday low of $112.72. The benchmark contract gained 6.2% in the week.

Traders said prices are rising after the main militant group in Nigeria's oil- rich region said it sabotaged a pipeline operated by a unit of Royal Dutch Shell PlC on Friday. "With this pipeline blowing up, traders have to think what else could happen over the weekend," said Phil Flynn, vice president of futures brokerage Alaron Trading. "The bears are already having kind of a weak hand now." Crude was mostly falling in morning trading as the dollar strengthened, weighing on dollar-denominated oil prices. See full story.

April 17: U.S. economy is rough shape, Fed reports

Source: Marketwatch

Washington -- The U.S. economy is in rough shape, a reading of the Federal Reserve's most up-to-date report on conditions indicates, with conditions weakening across much of the nation. Consumer spending has fizzled out, labor-market conditions are worsening and manufacturing activity is treading water, according to the Fed's Beige Book collection of anecdotal information from its 12 regional banks. Nine of the 12 districts said economic conditions were worse in mid-April than in the previous month. Three said that conditions had not changed much.

The report is prepared for Fed officials so that they can have a good sense of conditions "on the ground" when they meet on April 29 and 30 to set monetary policy. Most Fed watchers expect another rate cut of a quarter-percentage point or half a point. In addition to weak growth, inflation appears to be strengthening, the report said. Businesses are confronted with higher costs for inputs. Manufacturers have been better able than the service sector to pass these higher prices on to consumers. See full story.

April 16: Dollar falls to record low against euro

Source: Marketwatch

San Francisco -- The dollar remained under pressure against most major counterparts Wednesday, notching a fresh low against the euro after mixed U.S. economic data. The euro was changing hands at $1.5966, after rising as high as $1.5977, according to FactSet Research data. This marked loftiest level since the single European currency began trading in January 1999. It moved up from $1.5799 in late North American trading Tuesday.

The euro thus stands poised to test the technically and psychologically important target of $1.60, analysts said. The euro also hit a new all-time high against the British pound of at 80.88 pence. See full story.