Market Update - 8 Oct 2012

• Payrolls in the US on Friday drove markets Friday and there were some impressive numbers. This month 114k were added, in line with expectations, however last month was revised up by 46k to 142k and July was revised up by a similar amount to 181k.

• That meant the unemployment rate fell to 7.8% from 8.2%, the lowest since Obama took office in late 2008.

• USDMYR again did not manage to break 3.0500 last week despite opening Friday at 3.0450 and traded there for a short while. It seems 3.0500 is proving to be a very sticky support and we could see USDMYR bounce higher towards 3.0800 if the headlines continue to disappoint. Trading range for the week 3.0500-3.1000.

• US treasury yields rose 7bps to 1.74% as the curve steepened while equities liked it at first but sold off for the rest of the session and the S&P closed down 0.03% as oil got crunched, falling 2% from its post data high to close $89.88.

• Equities in Europe were strong but didn’t see the US fade into the close, where we saw another strong consumer credit figure (up $18bn vs +$7.25bn survey).

• Gold pulled back $15 to $1780, as it continues to try and break the $1800 level.

• Quarterly earnings season starts in the US on Tuesday and analysts expect to see the weakest QoQ performance since 2009. A fall of 2.7% vs Q3 last year is anticipated while only 3 months ago growth forecasts were at +1.9%.

• We know the big ticket manufacturers are struggling and those exposed to international trade are also doing it tough; it’ll be interesting to see if the banks and the consumer facing stocks (80% of index constituents) can save the day. The S&P is approaching highs set in 2007 and back in 2000 on declining volumes (triple top anyone?).

• European fin mins are in Luxembourg for the inaugural 2 day ESM board meeting starting tonight and will continue to muse over banking supervision and the Spain issue. Then Angela Merkel travels to Greece for the first time since 07 in a display of solidarity, after Samaras reported that there were still disagreements over the spending cuts and Jorg Asmussen from the ECB said Greece cannot have more time, because that would mean more money.

Data

Event		Survey		Actual		Prior		Revised
Germany
Factory Orders MoM (sa)		Aug		-0.50%		-1.30%		0.50%		0.30%
Factory Orders YoY (nsa)		Aug		-4.30%		-4.80%		-4.50%		-4.60%
USA
Change in Nonfarm Payrolls		Sep		115K		114K		96K		142K
Change in Private Payrolls		Sep		130K		104K		103K		97K
Change in Manufact. Payrolls		Sep		0K		-16K		-15K		-22K
Unemployment Rate		Sep		8.20%		7.80%		8.10%		--
Avg Hourly Earning MOM All Emp		Sep		0.20%		0.30%		0.00%		--
Avg Weekly Hours All Employees		Sep		34.4		34.5		34.4		--
Consumer Credit		Aug		$7.250B		$18.123B		-$3.276B		-$2.454B