Market Update 19/09/13

One line- Bernanke surprises markets by leaving monetary policy unchanged causing global asset prices to rally and the dollar to weaken.

- Global stocks soared to 5 year highs as Bernanke surprised markets by leaving QE unchanged. Treasuries experienced their biggest rally since 2011 with the ten year yield falling 16 basis points. The S&P added 1.2%, the Nikkei gained 1.8% and the FTSE has added 1.5% this morning.  http://www.bloomberg.com/news/2013-09-19/bernanke-resets-fed-policy-by-doing-nothing-as-markets-take-off.html

- Gold gained 4.1% on the Fed announcement leading the gains for metals. WTI jumped to $108.72 as stockpiles fell to the lowest level since March 2012. The dollar sold off for the fifth day in a row coming close to the lowest close since February. http://www.bloomberg.com/news/2013-09-18/asian-futures-rise-as-fed-holds-stimulus-aussie-retreats.html

- Yellen's chance of becoming the first female Fed Chairman improved as the number three Democrat in the Senate, Charles Schumer, backed her to be picked. Schumer said that Yellen would be an "excellent choice" to succeed Bernanke when his term ends on January the 31st. http://www.bloomberg.com/news/2013-09-18/new-york-s-schumer-backs-yellen-to-replace-bernanke-at-fed.html

- Emerging currencies experienced a massive relief on the Fed news with the Malaysian ringgit climbing the most since 1998. The ringgit gained 2.5% while the rupee gained 2.4% against the dollar.  http://www.bloomberg.com/news/2013-09-19/ringgit-leads-jump-in-asian-currencies-as-fed-maintains-stimulus.html

- European bonds rallied yesterday with Spanish ten year yields falling five basis points to 4.36%. German ten year yields slid the most since 2011 falling to 1.90%. http://www.bloomberg.com/news/2013-09-19/german-yields-drop-most-since-2011-after-fed-maintains-stimulus.html

Data

S&P 1725.52 1.22%
FTSE 6653.05  1.44%
Nikkei 14,766.18 1.80%

EUR/USD- 1.3552 0.18%
USD/JPY- 98.92 1.00%
GBP/USD- 1.6075 0.45%

Gold- 1367.45 0.27%
Oil (Brent)- 110.83 0.21%

Copper- 334.65 2.07%

10 year yields
US- 2.69 (0bps)
UK- 2.85 (-15bps)
Japan- 0.67 (-3bps)