Morning folks. Here’s your Week Just Gone, Week To Come and What The Papers Said bulletin.

THE WEEK JUST GONE
Once again the best was saved for the end of the week. Pressure had been mounting in the money markets with 3-Month LIBOR reaching a new high of 6.9%, forcing several UK banks to increase their mortgage rates. On Friday Northern Rock’s bombshell request for help from the Bank of England rocked markets, sending FTSE 100 points lower by lunchtime. The UK market rallied in US time to end the week +1.6%; although no major markets fell there was some variation in performance ranging from the Nikkei, U/C, through the DAX +0.8%% and S&P 2.1% to the Dow +2.5%.

China reacted to its highest inflation in a decade by raising rates to 7.29%, whilst Japan surprised markets with a fall in second quarter GDP.

Despite Next beating analysts’ forecasts and profits at John Lewis rising 51%, tales of woe echoed through the retail sector from FCUK, Primark and JJB. Home Retail benefited from good Argos figures offsetting a poor performance by Homebase.
One beneficiary from the liquidity crisis, money brokers Tullet Prebon saw volumes up 31% on last August.

Backer of lost causes, billionaire Joe Lewis bought a 7% stake in Bear Stearns, worth $860 million. Mr Lewis is also a stakeholder in Tottenham Hotspur.

Despite an increase in OPEC’s production quota the price of Brent Crude hit an all time high on Thursday, before ending the week at $76.22. Gold continued its good run, up another $11 to $714.

A solid week from Sterling was decimated on Friday as the news on Northern Rock caused traders to expect a loosening of interest rate policy. Sterling finished the week $2 lower at $2.0070, and at Euro 0.689. During the week the Dollar hit a 15-year low against a basket of currencies, and a new all time low against the Euro, but recovered slightly to finish at $1.388.

Government bonds’ safe haven status saw them improve by around 0.5%.

THE WEEK TO COME
It’s all about the Fed, stupid. There’s a lot of important data out on the economy, but the week’s focus, and a fair amount of nervousness, will be on the Federal Reserve’s decision on Tuesday evening. Will it be a 0.25% cut in rates, or will they go for a full half-point?
Ex-Fed chairman Alan Greenspan is the warm-up act, speaking on Monday, and key inflation indicators in both the UK and US will keep traders at their desks. In the wake of the Northern Rock crisis traders are nervously anticipating earnings reports from several US investment banks that have featured prominently in the sub-prime turmoil.

Look out for possible monkey business ahead of FTSE option expiry on Friday.

Monday Japan closed
Economic indicators:
US: Empire Manufacturing
Results:
UK: Burren Energy interims
US: Adobe Systems

Tuesday
Economic indicators:
UK: CPI, RPI
Ireland: Retail sales
EU: ZEW survey
US: FOMC interest rate announcement, Producer Prices, Long-term Capital Inflows
Japan: Monetary Policy Meeting
Results:
UK: Resolution interims, Debenhams trading statement.
Ireland: Independent News & Media interims
US: Lehman Brothers

Wednesday
Economic indicators:
UK: Minutes from last MPC meeting
EU: German Producer Prices
US: CPI, Housing Starts, and Building Permits
Results:
UK: Woolworth interims, Imperial Tobacco trading statement
US: Morgan Stanley

Thursday
Economic indicators:
UK: Retail sales, PSNCR and M4 Money Supply
Ireland: Wholesale Price Index
US: Weekly Jobless, Leading indicators and Philadelphia Fed Index
Results:
UK: Kingfisher, Morrisons, Premier Oil and SkyPharma interims
US: Bear Stearns, Goldman Sachs, Oracle and FedEx

Friday
Economic indicators:
UK: GDP
No Results today

WHAT THE PAPERS SAID
If anything typified the distrust of officialdom by normal people it was the clamour to withdraw funds from Northern Rock, despite assurances from The Bank of England, the FSA and politicians (ok, fair point on the last one). This story covered the newspapers with an abundance of clichés about hard places. The Sunday Times fears that withdrawals could run as high as £12 billion, nearly half the bank’s deposits, to the sound of stable doors banging around the financial community.

The Sunday Times looks forward to the banks’ third quarter reporting season, forecasting a global write down of $30 billion in bad debts and leveraged loans relating to the credit crunch. The paper reckons that, in the current climate of distrust and uncertainty, these results could have as much significance as Tuesday’s US interest rate decision.

The Observer is one of several papers to mention the Saudi Eurofighter order secured by BAE Systems, worth around £20 billion over the next 20 years.

Amidst all the talk of a need for lower interest rates The Observer serves a useful reminder that the rise in food prices isn’t going to disappear just yet. The substitution of field space for bio fuels in place of crops is partly to blame, along with the wrong kind of weather and increasing demand from China and India.

Any newly converted oil traders out there (have you read A Cruder Way To Trade?) might be interested in the former chairman of Shell telling the Independent on Sunday that diminishing resources could push oil to $150 a barrel.

The Sunday Business Post quoted the heads of Irish banks, who warned that even without further rate hikes from the ECB they might have to increase rates on their loans and mortgages. This is because the ‘unofficial’ cost of borrowing has been driven higher due to the reluctance of banks to lend to each other.