Market Update 09/10/13

One line- Markets mixed as positive news over Yellen confirmation contends with continued shutdown and debt ceiling stalemate.

- Obama will formally nominate Yellen to be the first female Fed chair today after administration officials broke the news yesterday. Yellen, seen as a dovish candidate, helped develop the Fed's forward guidance. Her term starts in January 2014 and will run for four years. http://www.ft.com/cms/s/0/48086982-306d-11e3-9eec-00144feab7de.html?siteedition=uk#axzz2hCuA2IQt

- Obama reiterated his position that he would not enter talks on the budget until after the Republicans have passed a clean bill raising the debt ceiling and ending the government shutdown. As the shutdown has continued the Republicans have shifted their focus away from Obamacare and towards the US fiscal position in general. Republican Speaker John Boehner has argued that 'There's never been a president in our history that did not negotiate over the debt ceiling'. http://www.ft.com/cms/s/0/77f90230-3033-11e3-80a4-00144feab7de.html#axzz2hCuA2IQt

- Equities are mixed as investors grapple with the continuing US debt talks and Yellen's nomination as Fed chairman. The S&P sold off 1.23% yesterday as both sides of the debt debate refused to budge although the dollar added 0.2% vs a basket of currencies. The Nikkei added 1% assisted by a weaker yen and positive comments from the Bank of Japan who said they believed the country was recovering.  http://www.ft.com/cms/s/0/ad8125c4-3090-11e3-80a4-00144feab7de.html#axzz2hCuA2IQt

- The IMF cut its economic forecast for developing nations causing emerging stocks to fall the most in a week. The rupee and the ringgitt slid 0.4% vs the dollar, while the MSCI emerging markets index sold off 0.4% also. http://www.bloomberg.com/news/2013-10-09/emerging-stocks-fall-most-in-a-week-as-imf-cuts-growth-forecast.html

- Italian and Spanish bonds are declining as they look to sell debt through banks. The market is reacting to oversupply with Italy selling 11 billion euros this week alone. Italian and Spanish bonds have rallied 5% and 9.3% this year. http://www.bloomberg.com/news/2013-10-09/german-bonds-little-changed-before-output-report-five-year-sale.html

Data

S&P 1655.45 1.23%

FTSE 6338.67  0.43%
Nikkei 14,037.84 1.03%

EUR/USD- 1.3524 0.36%
USD/JPY- 97.34 0.47%
GBP/USD- 1.6031 0.33%

Gold- 1316.65 0.20%
Oil (Brent)- 110.04 0.11%

Copper- 326.75 0.76%

10 year yields

US- 2.62 (-1bps)
UK- 2.68 (-1bps)
Japan- 0.65 (0bps)