Equity dividends still attractive

Economics

This week in the US we expect consumer confidence for February to stabilise while durable goods orders for January may give back some ground. Inflation figures for January should have picked up somewhat.

In Europe we expect the details of Q1 GDP data for Germany to show private consumption remained slack while it grew at a good pace in France. In Japan we expect Tokyo underlying consumer prices in February to continue falling year-on-year as deflationary forces persist.

Foreign exchange

EUR/USD: the euro went up to test its first resistance at 1.3090. From here, it may hesitate and make a downward correction towards 1.2950/10 before resuming the uptrend.

JPY/USD: the outlook remains for a drop to the 104.25/103.65 level.

Fixed Income

"The broadly unanticipated behaviour of world bond markets remains a conundrum", said Fed chairman Greenspan.

After "irrational exuberance" in 1996, Greenspan's "conundrum" is likely to be the trendy word in bond markets in the coming months. We review the message delivered by Alan Greenspan in his testimony to the Senate.

Equities

For most of the week, stock indices didn't move that much. The week before had ended with a small rally, that was in fact nothing else than the continuation of a broader upward movement.

Taking into account the dull long term bond yields, the dividend story maintains all its attractiveness. Investors love high dividend payers. That's why the sectors energy, materials and utilities again proved to be investor's favorites.