Market Update - 15 Jan 2013

• Very quiet in the US as the market waits to digest quarterly earnings which start in earnest this week, the S&P is down 0.1% and the Dow up 0.2%. Apple is down 3% after reports of reduced orders.

• USDMYR took a dive this morning as there are talks to hedge funds selling the pair, and pushing it to 3.1000, support at 3.0000 seems to be the target. SGDMYR also pressured down to 2.4500 and the SGDMYR pair is adding to MYR strength.

• Industrial production data out of Europe overnight showed no signs of an end to the economic slump. In Spain output fell 2.5% in November alone and is collapsing at an annualised pace of 7.2%, in Italy MoM output fell 1% for an annualised rate of -7.6%. German grew 0.1% MoM but the annual rate is still a dismal -3%.

• The Shanghai Composite Index closed yesterday 3% higher and at the highest level since June ahead of GDP data due Friday. Oil rose 0.6% while copper fell 0.3%.

• Stocks in Europe started ok on the strong China session but gave up gains after the IP data, with most bourses falling on the continent and the Eurostoxx down 0.1%. Peripheral spreads widened slightly as safe haven bonds were bid, UST’s -1bp to 1.76% gilts -4.6bps to 2.03% and bunds -3.2bps to 1.55%.

• The Euro is higher at 1.3380 vs the greenback after testing 1.34 and is really starting to move vs the CHF:::

• David Cameron has been forced to bring forward his speech on EU membership due to a Franco-German anniversary next week. The speech will take place on Friday where he will lay out his vision for a referendum and renegotiation of the country’s relationship with the EU.

• Lockhart (FOMC, mild dove non-voting) stated that even though he has supported open ended bond purchases he acknowledges legitimate concerns about the long term consequences of the Fed’s balance sheet. Williams said the Fed will need to keep buying assets well into second half of 2013, predicts unemployment to be at 7.0% or higher through end of 2014.