Market Update 07/10/13

One line- Market wide risk off moves as both sides of Congress pledge not to yield to the other.

- Equities, the dollar and oil are all under pressure this morning as a lack of progress in US debt ceiling talks weighs on the market. The Nikkei is down 1.2% while the yen strengthened 0.4% vs the dollar. Gold is stronger while the dollar index has slid 0.1% hovering above an 8 month low. http://www.ft.com/cms/s/0/87c7e75a-2f00-11e3-be22-00144feab7de.html?siteedition=uk#axzz2h1BfprPx http://www.bloomberg.com/news/2013-10-07/european-stock-index-futures-retreat-amid-u-s-shutdown.html

- US House speaker John Boehner vowed yesterday not to raise the debt ceiling without a "serious conversation" about what is driving the debt. He said that Obama's refusal to negotiate on passing a bill limiting government spending meant the country was headed in the direction of technical default. http://www.reuters.com/article/2013/10/06/us-usa-fiscal-idUSBRE98N11220131006

- Syria has begun to destroy some of its chemical weapon arsenal and looks to enter talks in mid-November aimed at ending the civil war. http://www.bloomberg.com/news/2013-10-06/syrians-start-destroying-chemical-weapons-under-un-supervision.html

- Last months Fed minutes are released on Wednesday but due to the government shutdown non farm payrolls will not be released along with other data points. The Bank of England meets this week with the market expecting no changes to policy. http://www.ft.com/cms/s/0/46419c8c-2cde-11e3-a0ac-00144feab7de.html#axzz2h1BfprPx

-As the government shutdown continues investors are moving to government bonds. The yield on 10 year Treasuries hit a two month low of 2.58 on the 3rd of October. Larry Fink and Bill Gross both dismiss the possibility of a US default and are looking ahead to the effect on monetary policy which is likely to be unchanged for a longer time period. http://www.bloomberg.com/news/2013-10-06/treasuries-becalmed-as-debt-ceiling-approaches-with-gross-buying.html

Data

S&P 1690.50 0.71%
FTSE 6403.19  0.79%
Nikkei 13,853.32 1.22%

EUR/USD- 1.3573 0.11%
USD/JPY- 96.96 0.53%
GBP/USD- 1.6046 0.22%

Gold- 1311.97 0.07%
Oil (Brent)- 108.44 0.93%

Copper- 327.75 0.71%

10 year yields

US- 2.62 (-3bps)
UK- 2.70 (-4bps)
Japan- 0.64 (0bps)