Market Update 08/10/13

One line- Debt ceiling talks weigh on US and European markets while Asian markets rally as India reduces liquidity constraints and Australian business confidence hits a 3½ year high. 

- As the debt ceiling stand off continues its effects are beginning to increasingly weigh on markets although Asia rallied yesterday. The S&P lost 0.9%, the FTSE lost 0.26% while the Nikkei added 0.3%. US third quarter earning season begins this week and Fed minutes from the September meeting are released on Wednesday. http://www.ft.com/cms/s/0/9ab84b26-2fc7-11e3-8b7e-00144feab7de.html?siteedition=uk#axzz2h1BfprPx

- Treasuries continue to rally and the dollar continues to weaken as the lengthening shutdown increases the likelihood tapering will be delayed. The ten year yield fell to 2.63% while the dollar index lost 0.2%. Gold futures gained yesterday adding 1%. http://www.bloomberg.com/news/2013-10-07/gross-buying-bonds-tops-boehner-s-default-warning-reality-check.html

- Asian shares rose as China's markets reopened after a week long holiday and India's central bank curbed liquidity constraints. The yen which had climbed to an 8 week high vs the dollar slipped as Japan's current account unexpectedly hit a record low for August. http://www.bloomberg.com/news/2013-10-07/dollar-holds-yen-slump-as-australian-index-futures-drop.html

- Obama stated that he will not back down from his refusal to negotiate on a "clean" debt bill but he has left the door open for a short term increase in borrowings. Obama urged John Boehner (the Speaker of the House of Representatives) to hold a vote on the clean bill believing there was now enough votes for it to pass. http://www.ft.com/cms/s/0/940a9a12-2f5f-11e3-8cb2-00144feab7de.html#axzz2h1BfprPx

- Australian business confidence hit a 3½ year high in September with the federal election, a lower Aussie dollar and lower borrowing rates thought to be the main drivers. The S&P/ASX 200 climbed to a 5 year high last month as the pro business candidate Tony Abbott won September's general election. http://www.ft.com/cms/s/0/53ee0074-2fc1-11e3-8b7e-00144feab7de.html#axzz2h1BfprPx

Data

S&P 1676.12 0.85%
FTSE 6426.59  0.17%
Nikkei 13,894.61 0.30%

EUR/USD- 1.3567 0.09%
USD/JPY- 97.08 0.38%
GBP/USD- 1.6077 0.12%

Gold- 1326.34 0.24%
Oil (Brent)- 109.73 0.05%

Copper- 330.75 0.33%

10 year yields

US- 2.64 (+1bps)
UK- 2.71 (+1bps)
Japan- 0.65 (+1bps)