Market Update 26/11/13

One line- Slow day trading as markets pause following Iranian deal rally.

- US stocks were flat yesterday, Asian stocks were mixed overnight and European stocks are down this morning. A softer dollar caused the Nikkei to sell off 0.7% while oil recovered most of its losses following the Iranian deal. Bonds rallied slightly higher with the US ten year down 1bp to 2.73. The 0.2% decline in the dollar index is supporting metal prices with gold up 0.8% and copper up 0.25%. US economic data released later today will be looked at closely for its impact on potential tapering. http://www.ft.com/cms/s/0/674fa1dc-5649-11e3-96f5-00144feabdc0.html#axzz2leBNNo3r

- Minutes released by the BoJ for its last meeting showed uneasiness between members who are beginning to worry that they will not achieve their 2% by 2015 inflation target. Two of the members wanted to change how the goal was worded using less precise language given that they feel the aim is too ambitious. Inflation is showing signs of peaking at 1.0% and some analysts believe further loosening of policy is to come. http://on.ft.com/19XG4PZ

- Senior members of both parties are calling for increased sanctions on Iran in a move that will put Barack Obama to the test. At a time when his reputation has taken repeated knocks on the turn around with Syria to the problems with the launch of the healthcare he may face a formidable challenge.Obama will need the support of Senate leader Harry Reid who initially lent his support to a new set of sanctions for Iran but has since moved into a uncertain position. The current lift on sanctions will remain in place for 6 months in which time it is hoped a new more comprehensive deal will be reached. http://www.ft.com/cms/s/0/280f8146-5652-11e3-96f5-00144feabdc0.html#axzz2leBNNo3r

- China is looking to crack down on banks that evade its lending limits by assets between each other. The new rules will impose restrictions on interbank lending and looks to try and curb some of the riskier activity Chinese banks are engaged in. In order to circumvent lending limits banks sell each other assets and buy them back later at a higher agreed price. Increasing dependence on the interbank market meant that overnight rates rates reached a record this year on the 20th June. http://www.bloomberg.com/news/2013-11-26/china-said-to-plan-crackdown-on-banks-evasion-of-lending-limits.html

Data

S&P 1802.48 0.13%

FTSE 6674.58 0.30%
Nikkei 15,515.24 0.67%

EUR/USD- 1.3558 0.30%
USD/JPY- 101.36 0.30%
GBP/USD- 1.6190 0.21%

Gold- 1253.40 0.16%
Oil (Brent)- 110.65 0.32%

Copper- 323.40 0.12%

 

 

10 year yields

US- 2.72 (-1bps)
UK- 2.76 (0bps)
Japan- 0.61 (-3bps)