Yields stay stable

Economics

This week we expect US business surveys for September to recover following weakness in August.

Consumer confidence will also likely have showed a slight improvement. In Europe we expect the German Ifo business survey for September to have fallen slightly due to fears for higher oil prices.

The French INSEE business index should stabilise as the domestic situation there is better. In Japan we expect industrial production for August to improve in line with better business confidence. The Tankan business survey should have seen a mild rise in Q3.

Foreign exchange

Euro/dollar: The euro broke out on the upper side of the consolidation which had been going on since June. Dollar/yen: Consolidation between 111.00 on the upside, and 109.00 on the downside.
Fixed Income

Yields were quite stable over the week despite the rather upbeat comments of Fed chairman Greenspan. It has to be noted however, that the Bund yield fell below the psychological 4% level. We do not see a key trigger for higher yields next week and expect a sideways evolution over the week.

Equities

Indices didn't manage to overcome the critical technical resistance levels at the beginning of the week and pulled back on Wednesday and the days after.

Main reason was the rise in oil prices, caused by a decline in US oil reserves as a result of production limitations in the Gulf of Mexico due to hurricane Jeanne.

We stick to our defensive stance as our economic scenario still suggests a further slowdown in economic growth for the rest of this year and subdued growth in 2005.