Market Update 02/09/13

One line- strong Chinese PMI data driving the markets rallying stocks, metals and oil. 

- Chinese manufacturing figures that have exceeded estimates pushed Asian and European stocks higher this morning. Estimates for the Chinese PMI figure were 50.6 with the actual figure at 51. Europe posted a figure of 51.4 compared with estimates of 51.3. Metals and crude also climbed on the news while the Yen dropped. http://www.bloomberg.com/news/2013-09-01/u-s-futures-to-aussie-jump-on-china-as-syria-sinks-crude.html 

- The pound reached a two month high vs the euro and the dollar on news that house price growth quickened in August. PMI readings today are expected to show expansion for a fifth month in a row for August. http://www.bloomberg.com/news/2013-09-02/pound-reaches-two-month-high-versus-euro-as-house-prices-climb.html

- The dollar continued to strengthen vs EM currencies strong economic growth data released last week raised the probability of tapering beginning this year. The peso and real declined 4.3% and 4% respectively against the dollar last month. http://www.bloomberg.com/news/2013-08-31/dollar-climbs-on-taper-bets-amid-syria-tension-rupee-tumbles.html

- Treasuries have declined for 4 months in a row, the longest losing streak in more than two years. Strong economic data has fueled the decline as conviction about tapering to begin this year has grown. Some strategists believe that payroll figures for last month will be key in deciding whether tapering will begin in September- a figure above 200 000 is expected to make September tapering very likely. http://www.bloomberg.com/news/2013-08-30/treasuries-set-for-fourth-monthly-drop-amid-fed-taper-prospects.html

- Abe's plan for a sales tax increase was boosted as capital spending data pointed to a faster economic growth than had been expected. Abe plans to increase sales tax from 5% to 8% in April 2014. http://www.bloomberg.com/news/2013-08-31/extra-japan-stimulus-needed-for-tax-move-panel-members-say.html

Data:
S&P 1632.97 0.32%
FTSE 6492.29  1.24%
Nikkei 13,572.92 1.37%

EUR/USD- 1.3219 0.02%
USD/JPY- 99.26 1.11%
GBP/USD- 1.5584 0.52%

Gold- 1394.15 0.08%
Oil (Brent)- 113.55 0.40%
Copper- 329.40 1.89%

10 year yields
US- 2.78 (0bps)
UK- 2.84 (+7bps)
Japan- 0.73 (+2bps)