Bond Outlook [by bridport & cie, June 25th 2008]
| The US authorities continue in their state of denial about the economy, and Bernanke is suggesting that it has been saved from collapse by the Fed’s rate cuts, freeing the central bank to tackle inflation. The US people think otherwise, reporting their lowest level of confidence in 16 years and turning away from McCain as the Presidential candidate who is likely to carry on the Bush economic policies (or should we use the less dignified word “practices”). The spiralling costs of food and fuel, removed from the official consumer price data, are diverting household revenues to the shopping basket and fuel tank, making it increasingly difficult keep up with their mortgage and other credit repayments. That goes for relatively well-heeled Americans, never mind those who are the direct victims of the sub-prime crisis. How symbolic that the FBI is now investigating mortgage fraud – remember all those “liars’ mortgages”; we wonder if they will be interviewing Greenscam, whose policies really started it all. |
| Du Pont and other major industrial companies are now announcing that they must pass on their higher input costs. |