Market Update 14/10/13

One line- Continued budget stalemate weighing on the markets.

- Gold and yen are gaining while European equities, US futures and the dollar are softer this morning. The continued budget impasse is driving the risk off moves. Industrial commodities are up as data released by China showed increased imports. Chinese CPI came in at 3.1% exceeding the 2.8% prediction. Tokyo and Hong Kong markets are closed for a public holiday. http://www.ft.com/cms/s/0/8e9afd5a-347e-11e3-8f1d-00144feab7de.html?siteedition=uk#axzz2hgOooFmp

- Senate leaders were locked in talks yesterday as the budget ceiling deadline looms on Thursday. Harry Reid the Democrat majority leader in the Senate and Mitch McConnell the chamber's top Republican have taken over negotiations as talks broke down within the House of Representatives. Republicans drafted a bill to fund the government until March and lift the debt ceiling until January 2014 but this was rejected as it included automatic sequestration. http://www.ft.com/cms/s/0/32521868-3423-11e3-af0f-00144feab7de.html#axzz2hgOooFmp

-Indian inflation unexpectedly accelerated to a 7 month high in September to 6.46% increasing pressure on the RBI to further raise rates. New governor Raghuram Rajan raised the repurchase rate to 7.5% and is expected to increase the rate again to 7.75% at the end of this month. His actions have helped to reverse the rupee's colossal decline as it has gained 13% from its record low on the 28th of August. http://www.bloomberg.com/news/2013-10-14/india-inflation-unexpectedly-quickens-adding-to-rate-rise-case.html

- Despite mass protests, a slowing economy and inflation problems President Rousseff has a massive lead in the polls ahead of Brazil's 2014 presidential elections. A new alliance looks to be the only chance for a change as Marina Silva an environmentalist has joined forces with Eduardo Campos an economist and governor of Pernambuco. If Rousseff wins next year her party will have controlled Brazil for 16 years, the longest ruling period in Brazil's history. http://www.ft.com/cms/s/0/427d0010-31d8-11e3-817c-00144feab7de.html#axzz2hgOooFmp

Data

S&P 1703.20 0.63%

FTSE 6481.24  0.09%Nikkei closed

EUR/USD- 1.3547 0.02%
USD/JPY- 98.30 0.28%
GBP/USD- 1.5968 0.07%

Gold- 1275.83 0.29%
Oil (Brent)- 111.15 0.12%

Copper- 329.15 0.69%

10 year yields

US- 2.69 (0bps)
UK- 2.74 (0bps)
Japan- 0.65 (0bps)