With the Equity markets back to their highest levels, on both sides of the Atlantic, since April this year, rumours of sunnier days just around the corner seem to be taking hold in the City.
Despite the poor shopping weather in June, UK retail sales increased by 0.1% on the month, and sales volumes were up 1.6% on June 2011. Yesterday was a day of consolidation after some impressive gains earlier in the week and with no key economic releases due, we could see more of the same today. The government received calls to slow the pace of budget cuts next year if UK growth shows no sign of recovering when Christine Lagarde presented the International Monetary Fund summary findings. In their clearest warning yet, they suggested quick action was required to avoid "permanent loss of productive capacity".
It would appear that Co-op certainly have good reason to be pleased with their days work yesterday after it was announced that they have secured some 632 of the old Lloyds Bank branches from the government in a deal worth £350m up front and another £400m over the next 15 years, somewhat short of the initial suggestion of £1.5bn. Judging by some of the comments in todays press, it would appear that the taxpayer has lost out, depite the Treasury assuring us of the commercial value of the deal.
The euro couldn't break out of its range yesterday, ignoring the mixture of bullish and bearish pulls that were seen during the trading session. By the close of business, EUR/USD was sitting near enough by the starting line, and it appears that the fact that the eurozone crisis isn't being spread across headlines on a daily basis it doesn't mean that caution has been binned by currency traders.
Crude was shunted 2.97 bucks yesterday, finishing the day at 92.97 as temperatures rose between the US and Iran. Israel pointed the finger at Iran for the recent terrorist attack in Bulgaria, and promised to respond with force by putting a strong price on the perpetrators. Another factor was the ongoing conflict in Syria, heightening supply concerns in the Middle East. At time of writing, things haven't changed much for black gold, with the price of a barrel trading at 92.56.
There wasn't much excitement yesterday in the price of a brick of gold, with modest gains of 3.1 dollars pushing the price up to 1581.5. The main pusher behind the price was the tension in the Middle East, sending risk averse investors into the saftey of the precious metal. The main driver for the shiny metal is still the 'will they? wont they?' surrounding the next bout of quantitative easing, and as long as Fed Chairman Ben Bernanke keeps his cards close to his chest, the yellow brick looks as though it's going to stay range bound.