Chinese stocks gain the most in four months on speculation of a fiscal stimulus package Lehman Brothers Holding Inc. falls 13% as it searches buyers for its investment-management department and on speculation that third-quarter write downs will be worse than expected. AIG falls after Goldman Sachs said it is increasingly likely the company will have to raise more capital. Dollar weakens, as commodities rebound. Gold back above 800 USD/ounce Nato warns Russia that it could not draw a new line

US Equities decline (Dow/S&P -1.5%) led by financials on growing concerns about Freddie Mac and Fannie Mae, Asian stocks fall too. Australian Central Bank says it may soon cut rates to avoid a deeper and more persistent slowdown. Crude oil falls as tropical storm Fay may miss oil fields in the Gulf of Mexico. Nationwide, UK’s biggest building society, plans to operate in Ireland, giving it access to ECB funding. German PPI (8.9% Y/Y) accelerates to the fastest pace since October 1981.

Gold fell below 800 USD/ounce, but rebounds this morning US equities end week mixed contributing to a mixed start of the week in Asia this morning UK house prices drop most since 2002, according to Rightmove British Chamber of Commerce sees a ‘distinct possibility’ of a technical recession in the UK Russia to start pulling back out from Georgia Thin calendar today: Euro zone trade balance and US NAHB housing market index Markets On Friday, the recent trend reversals were confirmed, as the

Markets now expect UK rates to fall by the end of the year Rally in short-term Gilts supports European bonds too US Treasuries fall prey to a late profit-taking move after failed test of the July highs US equities close session lower, but off the day lows. Asia mixed this morning Commodities rebound, oil (Brent) back up to 114 USD/barrel Greenspan sees US home prices bottom in the first half of 2009 Conflict between Georgia and Russia not over yet, as US launches an aid mission to Georgia

Bonds rally higher, as equities fall on renewed credit concerns Dollar rebound stalls against the euro, although commodities lose further ground Sterling weakens further on rising economic concerns following higher than expected UK inflation data Japanese economy contracts in Q2 highlighting the global economic slowdown Today’s Bank of England’s inflation report and US retail sales eagerly awaited Norges central bank set to leave rates unchanged at 5.75% Markets Yesterday, the rally of the

Euro and Sterling confirm technical break lower, which may point to a longer-term trend reversal War between Georgia and Russia fails to support oil and gold prices US equities extend rebound, but Asia slightly lower this morning JPMorgan Chase writes down an additional 1.5 B USD on mortgage-backed assets in July China’s CPI falls to a 10-month low at 6.3% Y/Y on slower food-price gains Fed’s Senior Loan Officer Survey points to tighter lending conditions on all major loan categories UK

Euro falls below key support levels damaging the technical picture European bonds gain further ground following Thursday’s less hawkish ECB press conference Commodities extend losses, oil below 115 USD/barrel US equities end week on a strong note. Asian stocks mainly higher this morning, except in China Australia’s central bank sees scope for lower rates, Aussie dollar remains under pressure Thin calendar today, apart from the UK where the PPI and trade balance are scheduled for release Impact

Czech Republic Next CNB Board meeting may be very exiting, but we still prefer a ‘on hold’ scenario. Hungary Inflation outlook has improved further on the back of lower oil prices Poland The FinMin remains (overly?) positive on inflation in 2008… Slovakia The NBS Increases its Economic Growth Forecast The Week Ahead CNB meeting and Czech inflation in focus Overview CNB and NBP: two central banks – two approaches Last week showed how the central banks of the same region, confronted with similar

Q2 GDP grew by 1.9% according to the BEA advance report, compared to the consensus estimate of 2.3%, while the Q1 figure was downwardly revised from 1.0% to 0.9% and Q4 2007 from 0.6% to -0.2%. This raises the odds that the US economy slid into recession at the end of 2007. The official dating will be done later by the NABE. Looking at the details, consumption growth was weak, up only 1.5% after 1.0% in Q1, despite the distribution of the tax rebate checks. Government consumption rose 3.4%

Headlines Zinc gains after China removed export tax rebate