Market Update 21/11/13

One line- Markets sell off as the prospect of early tapering becomes more likely, dollar shows strength.

- Federal reserve minutes released yesterday indicated that tapering was likely in the coming months if the economy improves as anticipated. While the Fed moves closer to scaling back stimulus central bankers in Europe and Japan are under pressure to combat deflationary risks.The Fed's forward guidance that rates will remain low until unemployment goes under 6.5% was being debated in the meeting also with some members wishing to lower that threshold. http://www.bloomberg.com/news/2013-11-21/fed-qe-taper-likely-in-coming-months-on-better-data-minutes-say.html

- Gold fell 1.7% overnight on the Fed minutes while the dollar strengthened adding 0.9% in the previous two sessions. US and Asia ex Japan shares fell while the yen decline against the dollar helped push the Nikkei up 1.9%. In Europe an unexpectedly weak PMI means stocks are down this morning. Yields rose on the tapering news with the US ten year adding 10 basis points to 2.78%. http://www.ft.com/cms/s/0/a284b704-525e-11e3-adfa-00144feabdc0.html?siteedition=uk#axzz2lB9GOvWf

- Activity in China's factory sector grew at a slower pace in November as export orders shrank. The HSBC PMI fell to 50.4 from Octobers reading of 50.9. The data pushed the Aussie dollar down by a quarter of a cent while China's CSI 300 (an index of the leading Shanghai and Shenzhen listed companies) lost 1.14% in the first 30 minutes of trading. http://uk.reuters.com/uk.reuters.com/article/2013/11/21/uk-china-economy-pmi-idUKBRE9AK0CJ20131121

- US budget talks are making progress with a deal in sight that would prevent some sequestration cuts with new revenues. The deal would set spending levels for one or two years while ensuring the government will not be shut down in January. Paul Ryan Republican chairman of the House budget committee and Patty Murray the Democratic chair of the Senate budget committee are leading the talks. http://www.ft.com/cms/s/0/cc41bc5e-523b-11e3-8c42-00144feabdc0.html#axzz2lB9GOvWf

Data

S&P 1781.37 0.36%

FTSE 6685.36 0.06%
Nikkei 15,365.60 1.92%

EUR/USD- 1.3440 0.01%
USD/JPY- 100.87 0.84%
GBP/USD- 1.6109 0.02%

Gold- 1247.71 0.27%
Oil (Brent)- 108.09 0.03%

Copper- 317.25 0.13%

 

 

10 year yields

US- 2.79 (-1bps)
UK- 2.80 (+7bps)
Japan- 0.62 (+2bps)