Last week was one of the most eventful in the US, as the Federal Reserve announced it will expand its purchase of Treasury securities in order to support the US economy. The Fed has committed to buy $600 billion in government bonds, despite concerns the programme could do more harm than good.

The decision takes the Fed into largely uncharted waters and is aimed at further lowering borrowing costs for consumers and businesses still suffering in the aftermath of the recession.

Meanwhile, US non-farm payrolls rose unexpectedly by 151,000, exceeding the median estimates of a 60,000 rise by a Reuters survey. This was the first increase since May, even though the unemployment rate remained unchanged at 9.6% for the month.

Elsewhere, the Institute of Supply Management for the manufacturing sector was significantly stronger in October, rising to 56.9 from 54.4 a month earlier. Likewise, the ISM non-manufacturing composite was also higher at 54.3 in October from its 53.2 in September. Meanwhile, factory orders rose 2.1% in September, well above the -0.5% registered in August.

In the eurozone, the European Central Bank (ECB) left interest rates unchanged, keeping them on hold at 1%. President Jean-Claude Trichet commented that non-standard measures were by nature temporary, reinforcing market speculation that the ECB is looking to exit from special liquidity measures introduced during the financial crises.

The Purchasing Mangers Index (PMI) for the manufacturing sector was upwardly revised to 54.6 in October, from a preliminary estimate of 54.1. Although this is well above the final reading of 53.7 in September, it is still below April’s post-recession high of 57.6.

Meanwhile, producer prices in the euro-area were unchanged month-on-month in September, while retail sales were disappointing, falling 0.2% in the same month.

In the UK, attention last week was also focused on the country’s Central Bank monetary policy. The Bank of England made no changes to its quantitative easing program and left interest rates unchanged at their record low of 0.5%.

Meanwhile, the PMI for manufacturing was stronger than expected in October, rosing to 54.9 from its prior 53.4, its first monthly advance since May. In the housing market, house prices rose month-on-month by 1.8% in October, well above the 0.6% predicted by economists.

This article has been prepared by Bank of Valletta plc for your general information only.