Market Update - 15 October 2012

• Another risk off session Friday as stocks were led lower by the banks (see below), the S&P down 0.3% (-2.2% on the week) and the Eurostoxx down 0.72%. Treasury yields fell 2bps while peripheral spreads contracted in Europe.

• USDMYR opened slightly higher at 3.0700 and still trading in the range of 3.0500-3.1000, expect thing trading volumes today with little headlines.

• JP Morgan Chase and Wells Fargo both reported record profits, with the growth coming from mortgage generation and refinancing, however both the banks reported lower NIMs, suggesting they are being squeezed by lower interest rates. JP’s stock was volatile but ended lower by 0.12% despite chief exec Jamie Dimon saying publicly that the US housing market had turned a corner. Wells Fargo dropped 2.7%.

• Then we had the UoM consumer confidence figure rising nearly 5 points, reaching highs not seen since the heady (toppy?) days of 2007:

• The IMF meetings concluded on the weekend with a communiqué from the host that was markedly more upbeat than had been the economic outlook released earlier in the week, suggesting it was merely gloss. They said there were signs of health in the global economy if leaders stuck to commitments and didn’t push too hard on austerity.

• Euro Zone industrial production grew slightly, benefitting from gains by Italy and France which offset a slowing Germany, while in the US the PPI ticked higher on energy costs.

• Chinese new loans in Yuan grew less than expected, however exports grew 9.9% YoY against expectations of 5.5%, the downtrend is still in place but it’s a start. Meanwhile the M2 money supply grew the most in over a year as the PBOCs measures show signs of working. Interestingly, the Renminbi reached a 19yr high vs the USD last week after hitting the top of its allowed trading band 3 days straight, something’s afoot:

• Coming up this week we’ve got the second presidential debate in the US on Tuesday, Chinese GDP on Thursday and Thursday and Friday also has EU meetings in Brussels. We heard noise about a Greek deadline this week on deficit reductions this week