Market Update 07/10/13

One line- Market wide risk off moves as both sides of Congress pledge not to yield to the other.

- Equities, the dollar and oil are all under pressure this morning as a lack of progress in US debt ceiling talks weighs on the market. The Nikkei is down 1.2% while the yen strengthened 0.4% vs the dollar. Gold is stronger while the dollar index has slid 0.1% hovering above an 8 month low. http://www.ft.com/cms/s/0/87c7e75a-2f00-11e3-be22-00144feab7de.html?siteedition=uk#axzz2h1BfprPx http://www.bloomberg.com/news/2013-10-07/european-stock-index-futures-retreat-amid-u-s-shutdown.html

- US House speaker John Boehner vowed yesterday not to raise the debt ceiling without a "serious conversation" about what is driving the debt. He said that Obama's refusal to negotiate on passing a bill limiting government spending meant the country was headed in the direction of technical default. http://www.reuters.com/article/2013/10/06/us-usa-fiscal-idUSBRE98N11220131006

- Syria has begun to destroy some of its chemical weapon arsenal and looks to enter talks in mid-November aimed at ending the civil war. http://www.bloomberg.com/news/2013-10-06/syrians-start-destroying-chemical-weapons-under-un-supervision.html

- Last months Fed minutes are released on Wednesday but due to the government shutdown non farm payrolls will not be released along with other data points. The Bank of England meets this week with the market expecting no changes to policy. http://www.ft.com/cms/s/0/46419c8c-2cde-11e3-a0ac-00144feab7de.html#axzz2h1BfprPx

-As the government shutdown continues investors are moving to government bonds. The yield on 10 year Treasuries hit a two month low of 2.58 on the 3rd of October. Larry Fink and Bill Gross both dismiss the possibility of a US default and are looking ahead to the effect on monetary policy which is likely to be unchanged for a longer time period. http://www.bloomberg.com/news/2013-10-06/treasuries-becalmed-as-debt-ceiling-approaches-with-gross-buying.html

Data

S&P 1690.50 0.71%
FTSE 6403.19  0.79%
Nikkei 13,853.32 1.22%

EUR/USD- 1.3573 0.11%
USD/JPY- 96.96 0.53%
GBP/USD- 1.6046 0.22%

Gold- 1311.97 0.07%
Oil (Brent)- 108.44 0.93%

Copper- 327.75 0.71%

10 year yields

US- 2.62 (-3bps)
UK- 2.70 (-4bps)
Japan- 0.64 (0bps)

JFK

A fantastic speech by JFK on his values and vision - http://www.youtube.com/watch?v=UUjJa9jnynA   http://www.youtube.com/watch?v=Ro5XO8rrCes
Analysis of the speech with historical context by Jeffrey Sachs, the UN economist- http://www.intelligencesquared.com/events/jeffrey-sachs-on-john-f-kennedy/

Market Update 04/10/13

One line- Continuing US shutdown and concern over debt ceiling talks weigh on the markets.

- Upcoming US debt ceiling talks and the ongoing shutdown are taking their toll on global stocks. The S&P sold off 0.9% yesterday and the |Nikkei lost 0.94% overnight. Industrial commodities have sold off while short term T bills have rallied. The Bank of Japan overnight decided not to add any additional stimulus as expected. http://www.ft.com/cms/s/0/4df09c0c-2ca8-11e3-8b20-00144feab7de.html#axzz2gkMbqbj0

- Angela Merkel is to begin holding talks with the Social Democrats today as she looks to form a "grand coalition". European partners are watching closely concerned that delays could push back EU wide decisions on matters that would have economic impacts. http://uk.reuters.com/article/2013/10/04/uk-germany-coalition-idUKBRE99305020131004

- US House speaker John Boehner has pledged to fellow Republicans that he won't allow the US to default on its debt. Republican leaders are trying to package other measures with a debt ceiling increase for a vote as early as next week. Obama has repeatedly stated that he will not allow policy attachments to increasing the debt limit. http://www.bloomberg.com/news/2013-10-03/boehner-debt-limit-option-said-to-be-democratic-votes.html

- Gold traders are bullish for a third consecutive week as the US shutdown continues. Gold is down 21% on the year but rallied 7.6% last quarter.  http://www.bloomberg.com/news/2013-10-03/gold-traders-bullish-a-third-week-on-u-s-stalemate-commodities.html

Data

S&P 1678.66 0.07%
FTSE 6456.75  0.12%
Nikkei 14,024.31 0.94%

EUR/USD- 1.3595 0.18%
USD/JPY- 97.15 0.12%
GBP/USD- 1.6073 0.51%

Gold- 1315.92 0.07%
Oil (Brent)- 109.18 0.17%

Copper- 326.75 0.03%

10 year yields

US- 2.62 (+1bps)
UK- 2.71 (+3bps)
Japan- 0.64 (+1bps)

Market Update 03/10/13

One line- Positive services data in China leads to general risk on moves in the market while the shutdown weighs on US stocks and the dollar.

- US stocks fell yesterday as investors contemplate the length and effect of the ongoing government shutdown. In addition to this a report showed that fewer workers were added in September than projected. The Dow sold off 0.39%. http://www.bloomberg.com/news/2013-10-02/u-s-stock-index-futures-fall-on-second-day-of-shutdown.html

- A measure of China's services industry breached a six month high yesterday extending the rally for Asian stocks. The good news was not enough to reverse the Nikkei's downward slide though the index only lost 0.09%. http://www.bloomberg.com/news/2013-10-03/asian-stocks-rise-as-investors-watch-u-s-shutdown-talks.html

- Emerging market currencies gained on the positive Chinese services data along with European stocks earlier this morning. Copper gained on the news while gold took a pause after rallying 2.2% yesterday. http://www.bloomberg.com/news/2013-10-02/australian-futures-rise-while-yen-holds-gains-oil-slips.html

- The dollar hit an 8 month low as the ongoing shutdown weighs on the currency. As the shutdown continues the likelihood of tapering in the near future reduces and so yields and the dollar have fallen. http://www.reuters.com/article/2013/10/03/us-markets-global-idUSBRE96S00E20131003

- Berlusconi back tracked on threats to destabilize the Italian government, while the Prime Minister Enrico Letta won a vote of confidence in parliament yesterday. http://uk.reuters.com/article/2013/10/02/us-italy-politics-idUKBRE9910A520131002

Data

S&P 1693.87 0.07%
FTSE 6448.93  0.18%
Nikkei 14,157.25 0.09%

EUR/USD- 1.3612 0.24%
USD/JPY- 97.83 0.48%
GBP/USD- 1.6225 0.01%

Gold- 1312.89 0.24%
Oil (Brent)- 109.10 0.08%

Copper- 331.80 0.06%

10 year yields

US- 2.65 (+3bps)
UK- 2.74 (+3bps)
Japan- 0.64 (0bps)

Market Update 02/10/13

One line- Investors look ahead to debt ceiling talks with risk off moves continuing in Europe and the US.

- Asian stocks outside Japan rose overnight as the rally from yesterday continued. The Nikkei slid 2.17% as the yen continued to strengthen and as Abe revealed a 5 trillion yen ($51 billion) stimulus package to cushion the blow from the sales tax increase in April. http://www.bloomberg.com/news/2013-10-02/asian-stocks-advance-as-investors-weigh-u-s-shutdown-correct-.html

- European stocks fell this morning along with commodities as investors weigh the effects of the US government shutdown. Brent crude lost 0.3% while the FTSE is down 0.87% this morning. Investors are now looking ahead to the debt ceiling talks and considering the potential length of the shutdown. Emerging currencies slid as the market moves away from riskier assets. http://www.bloomberg.com/news/2013-10-01/australian-futures-rise-after-u-s-gains-as-crude-sinks.html

- Gold held steady on Wednesday after selling off steeply but its status as a safe haven asset has been damaged this year. It is near a two month low at $1287. Bullion has declined 23% in 2013 on course for its first annual decline since 2000. The prospect of QE coming to an end meant investors were less concerned about protecting against potential inflation and so demand for the bullion dropped significantly.  http://www.ft.com/cms/s/0/ac25e156-2aaf-11e3-ade3-00144feab7de.html?siteedition=uk#axzz2gYO7NOJO

- The longer the shutdown lasts the more we are likely to see dollar weakness as investors expect tapering to be delayed further and further. The dollar index yesterday fell 0.4% on the first day of the shutdown and further weakness is likely. http://www.bloomberg.com/news/2013-10-02/dollar-seen-as-shutdown-loser-as-growth-hit-spurs-qe-currencies.html

- The US has begun implementing "final extraordinary measures" to pay the nations bills ahead of an October 17th deadline for Congress to approve new government borrowing according to Jack Lew, Treasury Secretary. Without a raising of the debt ceiling later this month the US government would enter technical default, a situation that would shake global financial markets violently. http://www.ft.com/cms/s/0/8dbd08ac-2a91-11e3-ade3-00144feab7de.html#axzz2gYO7NOJO

Data

S&P 1695.00 0.80%
FTSE 6411.86  0.75%
Nikkei 14,170.49 2.17%

EUR/USD- 1.3536 0.07%
USD/JPY- 97.53 0.48%
GBP/USD- 1.6220 0.15%

Gold- 1295.70 0.63%
Oil (Brent)- 107.76 0.17%

Copper- 327.75 0.11%

10 year yields

US- 2.64 (-1bps)
UK- 2.70 (-1bps)
Japan- 0.63 (-3bps)

Market Update 01/10/13

One line- Market weighs positive Japanese business confidence data against the US shutdown result rallying Asian and European stocks with gold while Treasuries and the dollar slid.

- US stocks finished down yesterday as the markets contemplated a US shutdown which was realized at midnight. The Senate voted 54 to 46 against a House funding bill that made changes to Obama's healthcare legislation. The shutdown will put as many as 800 000 in furlough. Asian stocks rallied from the biggest drop in six weeks as Japanese business confidence reached an almost six year high. The aussie dollar also rallied on positive retail sales data.  http://www.bloomberg.com/news/2013-09-30/u-s-futures-climb-as-shutdown-looms-while-oil-holds-drop.html

- European stocks advanced this morning reversing their biggest drop in a month and picking up the baton from Asian share gains. German data released this morning showed an unexpected increase in the unemployment rate to 6.9% http://www.bloomberg.com/news/2013-10-01/european-stock-index-futures-advance-amid-u-s-shutdown.html

- The dollar neared a 8 month low on the shutdown news while Treasuries ticked lower also. Gold climbed along with silver adding 0.6% and 1.2% respectively. http://www.reuters.com/article/2013/10/01/us-markets-global-idUSBRE96S00E20131001 http://www.bloomberg.com/news/2013-10-01/gold-holds-losses-as-partial-u-s-shutdown-looms-platinum-drops.html

- Shinzo Abe announced that he will authorize an increase the national sales tax from 5-8% on April 1st next year. The premier plans to give a speech outlining the reasons for the increase as well as stimulus plans to offset the short-term effect of the policy. http://www.ft.com/cms/s/0/960485b0-2a2f-11e3-bbb8-00144feab7de.html?siteedition=uk#axzz2gMap02d2

- The Brazilian real is headed for its biggest monthly gain in almost two years after the central bank raised its 2014 inflation forecast making it more likely the bank will engage in hawkish policy. The real has rallied 7.3% this month vs the dollar- the most since October 2011.  http://www.bloomberg.com/news/2013-09-30/brazil-real-heads-for-biggest-monthly-gain-in-almost-two-years.html

Data

S&P 1681.55 0.60%
FTSE 6456.24  0.09%
Nikkei 14,484.72 0.20%

EUR/USD- 1.3567 0.30%
USD/JPY- 98.03 0.24%
GBP/USD- 1.6239 0.33%

Gold- 1334.74 0.43%
Oil (Brent)- 108.09 0.26%

Copper- 333.30 0.30%

10 year yields
US- 2.65 (+4bps)
UK- 2.73 (+1bps)
Japan- 0.67 (-1bps)

Shutdown analysis

http://www.ft.com/cms/s/0/8842a372-26aa-11e3-bbeb-00144feab7de.html?siteedition=uk#axzz2gMap02d2