Market Update - 11 March 2013

• Non-Farm Payrolls in the US on Friday was way higher than market’s expectation of 147k, coming in at 236k jobs added in February, beating the survey.

• US unemployment rate also fell to the lowest since December 2008 at 7.7% from 7.9% as more people left the labour force. This is probably one of the most important data that the Fed keeps an eye on and if the number continues to fall we could see Bernanke starting to show more willingness to reduce and ease QE.

• USDMYR also opened higher on the back of more US Dollar strength and my view remain unchanged of the pair being upside biased still on the short term with the initial target at 3.1500 and a firm break will take us higher to 3.1700. But if there is a game cahnger then 3.0500 for now looks to be a decent support for the pair. Range for today 3.1000-3.1200.

• We saw the largest gain in construction payrolls since March 2007; manufacturing and goods producing payrolls also rose at the fastest pace in some months. Government payrolls fell 10k, continuing a trend that will accelerate as the sequester cuts hurt the public sector.

• Treasury notes broke out of their recent range, the 10 year yields hitting the highest level since April last year at 2.085% before slipping to close 4.6bps higher at 2.043% (a new April high on a closing basis).

• Stocks were up across the board, the Eurostoxx rising 1.41%, the DOW into new record territory and up 0.47% and the S&P just 25pts shy of its own record, up 0.45% to 1551.2.

• The world’s largest Bond fund manager PIMCO raised their growth forecast for the US in 2013 to 3%, as data in US continues to show promising recovery signs.

• The Euro did well to shrug off a Fitch downgrade of Italy to BBB+ late in the day, but it came after European bond markets had closed, with Spanish yields managing to crack a Nov 2010 low at 4.83%. The markets are clearly underestimating

• China data out on Saturday was cause for concern, with retail sales growing at the slowest pace since 2005 (according to Bloomberg data), CPI rising more than expected to 3.2% from 2% last month and industrial production decelerating to 9.9% YoY, lower than the forecast 10.6%.