A quiet day in Asia is a bit of a relief after all the recent fun and games and that is what we saw today with global markets having behaved themselves and a FED that was more than compensated for, there was really not much to play on and so we saw one of the quietest session in a while. The Hang Seng was the star performer, closing +1% on the day with Shanghai and Nikkei almost unchanged.
In Europe, we saw a bit of a bounce having seen markets trading lower for days now. All core indices closed higher with DAX, CAC, FTSE and IBEX all around 1% higher on the day. After we heard the minutes of a cautious FED last night markets gained a little confidence if only for a short time. Stories of yet more Property Fund closures it really was to be expected that the ratings agencies are revising their outlooks for the UK banks. Barclays, RBS and Lloyds all saw their ratings outlook cut to negative from stable by S+P. Late in the afternoon we heard that Michael Gove is eliminated for the leadership of the Conservative party which also hit sterling. ADP numbers came in 172k against expectations of 159k. So tomorrows NFP report will be closely watched.
US session opened in good shape but has seemed to struggle as oil sold 0ff. Crude lost an additional 4.5% today after similar losses yesterday. Eventually, the NASDAQ did manage a positive close whilst the DOW and broader S+P saw small losses.
The bond markets are preparing for tomorrow after even they had a quiet trading day. The US curve saw a parallel 2bp shift with 10’s drifting to close 1.39% after the slightly better ADP. In Europe Bunds were little changed as the demand for supposed safety continues! 10yr Bund closed -0.17% closing the US/Germany spread at +156bp. Italy closed unchanged at 1.24%, Greece 7.75% (-1bp), Turkey 8.88%, Portugal 3.04% (+1bp) and UK Gilt 10yr at 0.77%.