Market Update 15/11/13

One line- Yellen's dovish tone drives markets upwards.

- Japanese equities hit a 6 month high and global stocks are up as Yellen struck a dovish tone emphasizing that the dual mandate of the Fed is her first concern and that she sees no evidence of asset price bubbles at the moment. Any change in QE would be economic data dependent. Sovereign bond markets eased after rallying earlier in the weeks metals slid also. In the currency markets the yen slid beyond 100 yen to the dollar while the dollar is showing strength vs most of its main counterparts. http://www.ft.com/cms/s/0/00b69e86-4da1-11e3-bf32-00144feabdc0.html#axzz2ki7LAIra

- Disappointing growth figures have ruined hopes of a pick up in the recovery for the second half of the year. Growth in the eurozone for the third quarter was just 0.1%  while in Japan the annualized growth rate halved to 1.9% on the back of weak consumption and export data. Question marks are beginning to be raised about Abe's ability to get the Japanese economy firing again. http://www.ft.com/cms/s/0/8f178ee0-4c81-11e3-958f-00144feabdc0.html#axzz2ki7LAIra

- China's benchmark money rate jumped the most in 5 months as the People's Bank of China withdrew $2.5 billion in the last few days. The Shanghai Inter bank rate was at 4.71% for a three month deposit while the seven day repo rate rose 116 basis points to 5.45%. http://www.bloomberg.com/news/2013-11-15/china-s-money-rate-jumps-most-since-june-after-pboc-drains-funds.html

- A gauge of the Brazilian economy unexpectedly contracted in September adding to speculation that central bankers will limit increases to borrowing costs. Policy makers extended the maturity on swaps pushing the real up 0.9% vs the dollar. Policy makers are grappling with the problems of high inflation, an overly weak currency and slowing growth. http://www.bloomberg.com/news/2013-11-14/brazil-swap-rates-drop-as-economic-activity-falls-real-climbs.html

- Highlights of Yellen hearing. http://www.ft.com/cms/s/0/4f429554-4d75-11e3-a220-00144feabdc0.html#axzz2ki7LAIra

Data

S&P 1790.62 0.48%

FTSE 6695.00 0.43%
Nikkei 14,165.92 1.95%

EUR/USD- 1.3449 0.09%
USD/JPY- 100.42 0.41%
GBP/USD- 1.6075 0.06%

Gold- 1282.86 0.34%
Oil (Brent)- 108.54 1.33%

Copper- 316.15 0.33%

 

 

10 year yields

US- 2.71 (+2bps)
UK- 2.75 (0bps)
Japan- 0.62 (+3bps)