GLOBAL MARKETS REPORT
8 October 2013
EQUITY INDICES
US stocks ended the week sharply lower as concern grew that the current political impasse over the debt limit could lead to a government default.
Investors have placed money into European stock funds for 14 straight weeks, the longest period in more than 11 years, amid signs that the euroregion’s economy is rebounding.
INTEREST RATES Benchmark Bond Yields
The Treasury on Tuesday accepted €8 million in 28-day Treasury Bills at an average yield of 0.449% and €2 million in 182-day Treasury Bills at an average yield of 0.57%. Outstanding Treasury Bills amount to Euro 415,750,000 – an increase of €1 million from the previous week.
Bank of England Governor Mark Carney marked his 100th day in office last Tuesday with his monetary policy assured and a political battle looming over stability risks from the government’s housing-market plans. Since starting in July, he’s implemented forward guidance on interest rates, loosened liquidity requirements for lenders and put Jane Austen on a bank note, while the economy he oversees has shown increasing signs of strengthening, sending bond yields to a two-year high.
Bank of Japan deputy governor stressed that the economy continues to recover; furthermore he said that failure to lift the US debt ceiling could have major impact on global-Japanese economies. The Bank of Japan continues to cap yields amidst rising inflation.
The International Monetary Fund cut its global outlook for this year and next as capital outflows further weaken emerging markets and warned that a US government default could “seriously damage” the world economy compared with July predictions of 3.1% for 2013 and 3.8% for 2014.
Forex
The Swiss National Bank hasn’t had to intervene in currency markets to protect its franc ceiling for more than a year, SNB President said, adding that the measure remains in place if needed.
The Canadian dollar weakened against the US Dollar after the trade deficit widened more than expected in August and as government shutdown in the US dragged on.