Market Update 12/11/13

One line- Slow day in markets with dollar strength continuing and equities mixed/flat.

- US and European shares were broadly flat yesterday while Asian shares were mixed overnight. Monetary conditions in China tightened in October with new loans at 1/3 less than the previous month. The Nikkei added 2.23% as the yen softened to 99.49 and the dollar remained at a near 8 week high. The Hang Seng sold off 0.3%. Government bonds sold off with the US ten year yield adding 4 basis points to 2.79%.  http://www.ft.com/cms/s/0/8ea91542-4b40-11e3-8c4c-00144feabdc0.html?siteedition=uk#axzz2kKbaClVS

- The recent dollar strength is expected to abate say analysts from BNY Mellon as the market has underestimated how dovish the Fed is likely to be under Yellen. Chief currency strategist Simon Derrick believes that EUR/USD will test $1.38 in the next three months and 93 yen in the next 5 months. http://www.bloomberg.com/news/2013-11-12/dovish-fed-to-sap-dollar-in-surprise-to-market-bny-mellon-says.html

- The US and Britain have sent warships to to assist the relief effort in the Philippines. 660000 people have been displaced and the current death toll of 10 000 is expected to rise sharply in the coming days. In many areas the only branch of government working is the military. The US sent the USS George Washington a ship with a crew of 5000 and more than 80 aircraft. http://uk.reuters.com/article/2013/11/12/uk-philippines-typhoon-idUKBRE9A701120131112

- The Iranian foreign minister Mohammad Zarif has stated the reason for the breakdown in nuclear talks was division amongst Western powers. Responding to remarks by John Kerry Zarif said that blaming Iran only served to undermine confidence in talks beginning on the 20th of November. http://uk.reuters.com/article/2013/11/12/uk-iran-nuclear-idUKBRE9A70DD20131112

- The Industrial and Commercial Bank of China has been added by regulators to a list of banks that need to raise their capital requirements in order to counter the risk they pose to the financial system. The ICBC is the biggest bank in the world by market capitalisation. JP Morgan and HSBC have been told by the regulator that they have to hold 9.5% equity to risk weighted assets the highest of any banks. http://www.ft.com/cms/s/0/9fb7992e-4b01-11e3-ac3d-00144feabdc0.html#axzz2kKbaClVS

- David Cameron's pursuit of trade deals with countries that have questionable human rights records is beginning to cause diplomatic and political unrest. Cameron met with the family of a Greenpeace protestor that had been arrested in Russia and has expressed his unhappiness to Putin at the same time Vince Cable attempts to draw up a trade agreement with the country. The PM argues that the biggest threat facing Britain today is economic. http://www.ft.com/cms/s/0/93420836-4aee-11e3-8c4c-00144feabdc0.html#axzz2kKbaClVS

Data

S&P 1771.89 0.07%

FTSE 6720.72 0.11%
Nikkei 14,588.68 2.23%

EUR/USD- 1.3382 0.19%
USD/JPY- 99.75 0.60%
GBP/USD- 1.5948 0.26%

Gold- 1281.32 0.12%
Oil (Brent)- 106.15 0.23%

Copper- 324.50 0.44%

 

 

10 year yields

US- 2.79 (+4bps)
UK- 2.84 (+3bps)
Japan- 0.59 (+1bps)