August started with cautiously reassuring half year figures from UK banks and ended with the Chancellor, Alistair Darling, stating that the economic conditions are the worst for 60 years. In the meantime, figures confirmed the dire state of the UK housing and automobile markets. The only good news came with the fall in Oil and Commodity prices, with oil falling from $125 per barrel at the start of the month to $115 at the end.This fall was, however, partly offset by the 8.1% collapse in the value of Sterling from $1.98 to $1.82 over the period. Inflationary pressures continued with rises in Food and Energy costs resulting in the CPI inflation figure of 4.6% and RPI of 5.0%, compared with 3.8% and 4.6% the previous month. UK base rates were unchanged at 5.0% as was the US Federal Reserve rate at 2%. The 3 month LIBOR shaded lower to 5.75%.Despite all the gloom, the market managed to recover last month's falls with the FTSE 100 Index rising 4.9% and the more broadly based FTSE 250 Index gaining 6.3%. Fixed interest securities improved slightly on the prospect of falling interest rates. The unit bid price of the Marlborough Extra Income Fund improved by 2.24p (3.4%) to 67.84p, to yield 6.12%. No changes were made to the portfolio during the month.
