Goodbody Stockbrokers economist Deirdre Ryan in a comment on the UK economy said today: "While last weeks 150bps rate cut by the Bank of England may do much to shore up confidence, the UK economy is facing into uncharted waters at present, with activity indicators continuing to deteriorate across the board. The BRC retail sales data for October, released overnight, provides further evidence of this, with like for like sales falling 2.2% yoy. This was the fifth consecutive month of falling like for like sales, indicating the wave of pessimism that prevails among UK consumers. Total sales dipped only slightly, by 0.1%, although this is the first time since April 2005 that total sales fell below those of a year earlier. In the three months to October, total sales increased by 0.8%, pointing to a subdued outturn for consumer spending in Q3. With mortgage equity withdrawal a major source of spending power for consumers over recent years, falling housing values have put a halt to that particular trend. In this light, the RICS indicator, also released overnight, reveals expectations for further house price declines remain at overwhelmingly high levels.

The RICS balance for October, (which measures the percentage of surveyors reporting rising prices less those indicating price declines) came in at -82, in line with the outturn over the last three months. This was the 15th consecutive month of negative readings and indicates that there is clearly more to go in terms of UK house price declines. While last weeks rate cut may provide a boost to the housing market, transactions currently remain at anaemic levels with a lack of mortgage finance continuing to be a major constraint. RICS indicates that an average of just 10.9 properties were sold per surveyor in the three months to October, the least since the survey began in 1978. With little in the way of positive newsflow in either of these reports, it is a question of how much lower the Bank of England will go with interest rates. The publication tomorrow of the Quarterly Inflation Report will provide some clues on that front."

Davy economist Rossa White commented on the two-speed manufacturing sector in Ireland: "Irish industrial production data are quite informative. Overall, production is growing – but only just. Yet the multinational (and mainly foreign-owned) sector and the rest of industry (mainly Irish-owned) are heading in opposite directions. It is an echo of 2001-2002. The struggles of indigenous industry reflect the recessionary domestic economy and unfavourable exchange rate movements.

Output in industry rose in the third quarter. Compared with the second quarter, production was up 1.5% seasonally adjusted. That was a huge improvement on the 2.8% quarter-on-quarter drop in April-June. But multinational industry (chemicals, software and electronic equipment) and the rest of industry diverged. Output for mainly foreign-owned industry increased 2% in Q3 over Q2, while output in the rest of industry dropped 2.9%.

Gold spot price

Gold is trading at $744.50 down 20 cents from Monday's spot price close in New York.

Mark O'Byrne of Gold Investments UK and Ireland, commented on Monday: "Physical demand remains very strong internationally as seen in continuingly high premiums, delays, rationing and unavailability of most popular bullion coin and bar products. Only larger exchange bars (Gold 100 oz and 400 oz and Silver 1000 oz) are readily available for immediate purchase and premiums are rising in this section of the market too. ETF gold holdings also show that demand remains robust with holdings remaining near record highs.

China's massive $600 billion stimulus plan is the first of many efforts by governments internationally to prevent a deflationary crash, a global recession and a possible Depression. Emergency tax cuts also look increasingly likely. Equity markets in Asia and Europe have reacted favourably to the Chinese measures but as the ECB Chairman has warned China is one of the few nations that has the financial firepower to undertake such measures without undermining their national balance sheets.

Most western nations are not creditors as China is, rather most are debtors (some massively so) and their balance sheets are already in bad shape. The massive risk now facing industrialised economies is that they cannot fund their significant budget deficits through the issuance of government bonds as there simply are no little or no buyers.

Already in the world's second largest economy, Japan, parts of the bond market have seized up. As commented on in the FT's Lex today: "Talk about bad timing. Japan's government is pumping up its spending just as parts of the government bond market in the world's second biggest economy have seized up. Last month, just weeks before unveiling a $50bn fiscal stimulus package, Tokyo was forced to pull two auctions of inflation-linked bonds, and one of floating-rate bonds. These segments of the bond market, idiosyncratic at the best of times, and together accounting for some 8 per per cent of Japanese government debt, have turned positively dysfunctional since Lehman Brothers collapsed in September.""