Market Update 02/12/13

One line- Stronger than expected Chinese PMI kicks off December rates sell off while risk on currencies gain.

- An improving Chinese PMI has kicked off December with a measure of 50.8, beating the forecasts of 50.4. The Nikkei was flat overnight as the yen stabilised at 102.49 while European stocks have sold off this morning. The pound rose for a fifth day adding 0.3% along with the kiwi dollar and the aussie dollar who gained 1% and 0.5% on the Chinese data. The dollar continued its weakening supporting industrial commodity prices while US yields continue to tick up adding 3bp to the ten year rate at 2.78% while the UK ten year added 6bp to 2.83%. Gold fell 0.8% as the Chinese report added to optimism about the global economy. http://www.bloomberg.com/news/2013-12-01/yen-holds-drop-asian-futures-mixed-before-factory-data.html http://www.ft.com/cms/s/0/5d06d500-5aff-11e3-942a-00144feabdc0.html?siteedition=uk#axzz2mJ6HA6Em

- David Cameron is pushing for a free trade deal to be developed between China and the EU but he understands he is likely to meet resistance within the bloc. The idea was proposed by the Chinese government and could help to raise bilateral trade to $1tn by 2020. Cameron's comments come at the beginning of a three day trip to China where he will meet the Premier Li Keqiang to discuss the deal as well reductions in tariffs for key sectors. http://www.ft.com/cms/s/0/d152cade-5a7f-11e3-b255-00144feabdc0.html#axzz2mJ6HA6Em

- Thai prime minister Yingluck Shinawatra has rejected calls to step down while protesters clash with police for a second day in Bangkok. She has stated she will seek to "open every door" for peaceful negotiations with the opposition who issued an ultimatum for her to step down in two days. Protesters are besieging the Government House and have already overran the state television station. At least three people have died while 58 are injured as clashes have gone on through the night causing the government to call for a voluntary curfew between 10pm and 5am. The Thai baht is down 0.7% this morning. http://www.ft.com/cms/s/0/b147d052-5b08-11e3-b255-00144feabdc0.html#axzz2mJ6HA6Em

- The biggest demonstrations in the Ukraine since the 2004 Orange Revolution have been sparked by the government's decision to back away from a deal to strengthen ties with the EU under pressure from Putin. Protesters occupy two floors of a government building using it as headquarters and hundreds of protestors remained in the Maidan square in Kiev overnight. Most of the estimated 350 000 protesters have been non violent as we move into the 11th day of protests. http://www.ft.com/cms/s/0/e8b86a86-5b28-11e3-848e-00144feabdc0.html#axzz2mJ6HA6Em

Data

S&P 1805.81 0.08%

FTSE 6636.23 0.22%
Nikkei 15,655.07 0.04%

EUR/USD- 1.3550 0.31%
USD/JPY- 102.79 0.34%
GBP/USD- 1.6409 0.24%

Gold- 1239.33 1.12%
Oil (Brent)- 109.99 0.27%

Copper- 318.95 0.48%

 

 

10 year yields

US- 2.79 (+4bps)
UK- 2.83 (+6bps)
Japan- 0.61 (+1bps)