Market Update 04/10/13

One line- Continuing US shutdown and concern over debt ceiling talks weigh on the markets.

- Upcoming US debt ceiling talks and the ongoing shutdown are taking their toll on global stocks. The S&P sold off 0.9% yesterday and the |Nikkei lost 0.94% overnight. Industrial commodities have sold off while short term T bills have rallied. The Bank of Japan overnight decided not to add any additional stimulus as expected. http://www.ft.com/cms/s/0/4df09c0c-2ca8-11e3-8b20-00144feab7de.html#axzz2gkMbqbj0

- Angela Merkel is to begin holding talks with the Social Democrats today as she looks to form a "grand coalition". European partners are watching closely concerned that delays could push back EU wide decisions on matters that would have economic impacts. http://uk.reuters.com/article/2013/10/04/uk-germany-coalition-idUKBRE99305020131004

- US House speaker John Boehner has pledged to fellow Republicans that he won't allow the US to default on its debt. Republican leaders are trying to package other measures with a debt ceiling increase for a vote as early as next week. Obama has repeatedly stated that he will not allow policy attachments to increasing the debt limit. http://www.bloomberg.com/news/2013-10-03/boehner-debt-limit-option-said-to-be-democratic-votes.html

- Gold traders are bullish for a third consecutive week as the US shutdown continues. Gold is down 21% on the year but rallied 7.6% last quarter.  http://www.bloomberg.com/news/2013-10-03/gold-traders-bullish-a-third-week-on-u-s-stalemate-commodities.html

Data

S&P 1678.66 0.07%
FTSE 6456.75  0.12%
Nikkei 14,024.31 0.94%

EUR/USD- 1.3595 0.18%
USD/JPY- 97.15 0.12%
GBP/USD- 1.6073 0.51%

Gold- 1315.92 0.07%
Oil (Brent)- 109.18 0.17%

Copper- 326.75 0.03%

10 year yields

US- 2.62 (+1bps)
UK- 2.71 (+3bps)
Japan- 0.64 (+1bps)