Market Update - 19 Dec 2012

• Asian stocks rose, with the regional benchmark headed for the highest close since February, amid signs U.S. policy makers are making progress in budget negotiations. Japan’s Nikkei 225 Stock Average climbed above 10,000 as the nation’s central bank starts a policy meeting.

• Japan’s exports fell for a sixth month in November and the trade deficit swelled, underscoring the challenge that incoming Prime Minister Shinzo Abe faces in reviving growth. Shipments slid 4.1 percent from a year earlier, the Finance Ministrysaid in Tokyo today. The median forecast of 23 economists was for a 5.5 percent decline. Imports rose 0.8 percent leaving a deficit of 953.4 billion yen ($11.3 billion), the third-largest on record.

• Treasuries slid for a second day as investors bet U.S. leaders will resolve a budget showdown and the U.S. sold $35 billion of five-year debt to the lowest demand in five months.
  
• Thirty-year bond yields climbed to a three-month high as President Barack Obama and House Speaker John Boehner negotiated
  to end a stalemate that could push the economy into recession next year. Yields on five-year securities climbed to the highest level in seven weeks as the sale, the second of four note offerings this week totaling $113 billion, drew bids for 2.72 times the amount offered, the least since July.

• Spain’s government bonds rose, with two-year yields falling toward the lowest level in two weeks, as borrowing costs declined at a 3.52 billion-euro ($4.65 billion) bills auction.
  
• Five-year yields dropped the most in almost three weeks as the country met the maximum target the Treasury set for the last debt sale of the year.

• Italian 10-year bonds rose for a third day as the nation’s Senate begins discussing the government’s 2013 budget plan. Germany’s 10-year yields climbed to the highest in two weeks before a report tomorrow that economists said will show business confidence increased in December.

• USDMYR opened a touch lower at 3.0550 today still trading around the 3.0600 handle as market continues to sit tight and wait for 2013.

• Expect the remaining 2 weeks of 2013 to be quiet as the fiscal cliff in US hogs the headlines in US and also global markets as the uncertainty is causing market participants to sit by the sidelines for more signals and certainties.