English to German Bus/Financial Investment / Securities Market outlook

• However, the housing sector is showing increasing signs of cooling. Prices of new houses have stabilised as have sales of existing homes. Confidence among homebuilders has plummeted and it has become more difficult to sell houses. Large price increases over the past few years have made homes less affordable. Consumer confidence has rebounded since the hurricane season has ended and spending has improved in the last months of 2005. However, we expect consumption to slow gently in the months ahead as the housing market cools. Gauging government spending is rather difficult. The budget deficit of November was he biggest on record for that month and the ***12-month trailing deficit*** is increasing again, which pints to expansionary budgetary policy. However, it seems that hurricane-related spending is likely to be less than many anticipate. The yield curve as measured by the difference between two-year and ten-year bond yields inverted in late December. This is often interpreted as a signal for recession, but we think there are structural factors that depress bond yields.

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