Market Update 04/11/13

One line- Markets mixed as investors weigh the possibility of further eurozone monetary easing against a less than dovish Fed statement.

- European stocks are up this morning extending a four week advance on reasonable corporate earnings, factory data and the possibility the ECB will increase stimulus when it meets this week. The euro fell to a six week low against the dollar. Asian shares outside Japan slid as investors moderate predictions of March tapering on a less than dovish tone from the Fed. Gold slid while the aussie dollar strengthened. Rates are unchanged. http://www.bloomberg.com/news/2013-11-03/australian-futures-climb-after-u-s-jump-yen-holds-drop.html

- US public investment has fallen to its lowest level since WWII as Republicans manage to curb Obama's spending on this issue. Compared with a post war average of 5%, public gross capital spending is now just 3.6% of GDP. The Republican effort has come a cost with their approval ratings at the lowest level since records began. http://www.ft.com/cms/s/0/f0e71a16-4487-11e3-a751-00144feabdc0.html#slide0

- The CBI Britain's largest business group is to begin a three year campaign to prevent the UK leaving the Eurozone if a referendum is held by David Cameron in 2017. The group will argue that membership of the Eurozone is worth £3000 to every household in the UK. http://www.ft.com/cms/s/0/94b18486-4318-11e3-8350-00144feabdc0.html?siteedition=uk#axzz2jfbJ2ffc

- Deutsche Bank who correctly predicted rising rates in the first half of the year believe Treasury yields will hit 2.25% by the end of the year as the US recovery is not as strong as many have hoped. The view contrasts from that of many market participants who believe data and asset prices will support the view that the Fed will taper soon and so expect to see an increase in yields by the year end.  http://www.bloomberg.com/news/2013-11-04/bull-market-lives-as-deutsche-bank-targets-2-25-treasury-yields.html

- Large US banks have had billions of dollars of losses reversed thanks to the recent rally in Treasuries. Data released by the Fed showed unrealized gains had recovered from negative territory to $8 billion dollars. http://www.ft.com/cms/s/0/50962b44-4313-11e3-8350-00144feabdc0.html#axzz2jbQVlQ3t

Data

S&P 1761.64 0.29%

FTSE 6762.37 0.41%
Nikkei 14,201.57 not trading

EUR/USD- 1.3498 0.08%
USD/JPY- 98.67 0.00%
GBP/USD- 1.5951 0.16%

Gold- 1315.07 0.08%
Oil (Brent)- 106.34 0.41%

Copper- 327.60 0.68%

 

 

10 year yields

US- 2.61 (-1bps)
UK- 2.65 (+1bps)
Japan- 0.59 (0bps)