Market Update - 4 December 2012

• The ISM Manufacturing index declined in November to 49.5 from 51.7, falling back into negative territory for the first time since August. November’s drop was unexpected because each of the regional manufacturing surveys we track (besides the Philly Fed survey) increased in the month, as did the Markit PMI, while global manufacturing sentiment seems to be gradually improving.

• The details of the report provided mixed signals. On the positive side, both production and supplier deliveries increased in the month and are in expansionary territory. On the negative, new orders (domestic and external), employment and inventories all declined significantly.

• Greece offered 10 billion euros (USD 13bio) to buy back bonds issued earlier this year as the bailed-out nation attempts to cut a debt load that may threaten future international aid. Issues in Europe will not go away overnight and expect more headlines news from Greece in 2013 but market have been lately immune to the news and reacted little unless it’s a major headline.

• USDMYR opened at 3.0420 unchanged despite a mild risk off last night. Expecting low trading volume in early Dec and range to be still in the 3.0300-3.0800 range, with little change for the day.

• Australia Retail Sales for October came in flat (vs. est: +0.4% ; previous: +0.5%). Q3 Business inventories edge higher by +1.1% (vs. est: +0.4% ; previous: +0.6%). RBA rate decision today, market seems to be quite confident

• RBA will cut 25bps to bring the official rates to 3.00% but as I was discussing with my colleague, the rate cut narrows the yield differential and it also puts a gloomy tag on the local economy, the only party happy with the rate cut will be bond holders.

• DJIA down 0.46% to finish at 12,965.60 as the weaker US data again dictating the direction of equities market.