A chap in Syracuse, NY, won a $5m lottery prize in 2006. Suspicious that his wife might be on the make, he kept the news of his good fortune secret and hid the winning ticket in his sock drawer. Only in March this year did he collect his prize, a week before the ticket would have expired worthless. Putting aside the man's paranoid suspicion, which cannot have been comfortable for him, his inordinate caution has also cost him big bucks. Six years of inflation has eroded the value of his $5m win to $4.4m. Had he bought six-year treasury bonds in 2006 his $5m would have grown to $6.6m. There again, perhaps he figured that 100% of $4.4m would be better than 50% of $6.6m.
Even had he bought sterling back then at its pre-crisis level, compound interest would have turned his $5m into $5.3m, despite sterling's 15-cent decline over the six years. And the pound moved lower again yesterday, losing ground to everything except the beleaguered Canadian dollar. As had been the case on Tuesday and Wednesday, better than expected UK economic data were not enough to attract sterling buyers. Thursday's figures covered retail sales, which were up by a useful 0.6% in September and 2.5% higher on the year. The pound did react positively at the time of the announcement but had given up any gains well before lunch and stumbled through the afternoon at close to its opening levels.
Everything came unglued in the evening, when Europe was on its way to dinner and New York was running the show. Some clot in Google's PR office released the company's quarterly results ahead of the appointed time. The numbers, which should have come out after the stock market had closed, were well below expectations and knocked the stuffing out of Google's share price. The melee sent investors scuttling for currency cover. The yen did best out of the bungle, with the US dollar close behind. The Europeans and the commodity dollars took a hit and sterling fell by one US cent in fairly short order. At the same time it gave up half a cent to the euro, for no particular reason.
As London traders were arriving for work this morning the pound looked to be in danger of a further setback. The success of EU heads of government last night in agreeing a coordinated bank supervision regime has reassured investors that the end is nigh for the Euroland sovereign debt crisis. At the same time they are wary about this morning's UK public sector borrowing figure. Even if it is better - lower - than forecast, the triumph in Euroland is likely to eclipse the calm lack of panic in Britain.
There is little among the day's ecostats to distract from developments in Brussels. Italian industrial orders won't. US existing home sales won't. The Canadian inflation figures might but their importance has been devalued by the comments of the Bank of Canada governor earlier in the week. That just leaves the UK borrowing data, and they have a less than glorious record of exceeding expectations. Have a good weekend.