We’ve mentioned several times that the NFP numbers will be published lunch time UK time today, 8:30 eastern time in the USA, as opposed to the usual Friday. The 18 day delay is due to the temporary govt. shutdown. We’ve also mentioned that the number for the jobs created might be an ‘outlier’, a rogue number as a consequence of the shutdown, therefore traders shouldn’t look too deeply into the print as it could be misleading. It may be overly optimistic, similarly the print may come in way above economists’ predictions. We’ve witnessed the effect the lack of data from California and Nevada had on the weekly unemployment claims over recent weeks, therefore traders would be advised to proceed with extreme caution when attempting to trade this high impact news event.
UK public net sector borrowing falls
In 2012/13, public sector net borrowing excluding temporary effects of financial interventions and also excluding the effects of the transfer of the Royal Mail Pension Plan and the transfers from the Bank of England Asset Purchase Facility Fund was £115.4 billion. This was £3.1 billion lower than in 2011/12. In 2012/13, public sector net borrowing excluding temporary effects of financial interventions (PSNB ex) was £81.0 billion. This was £37.5 billion lower than in 2011/12, when it was £118.5 billion.
Charlie Bean, a Bank of England’s deputy governor, urges Europe to press on with banking reform. Mr. Bean stated;
[quote]”It was important Europe used the window created by Mario Draghi, who he credited with saving the euro from break-up. The euro area is no longer in existential crisis, in part as a result of the willingness of the European Central Bank (ECB) to take redenomination risk off the table through its Outright Monetary Transactions programme. The countries of the euro-area periphery have also made progress in restoring competitiveness and rebalancing the composition of demand, though there is still quite a way to go. Member states are working towards the creation of a functional banking union, which has the potential to break the link between sovereigns and banks.”[/quote]
Market snapshot at 10:30am UK time
The Nikkei closed up marginally by 0.13% in the overnight session, Hang Seng was down 0.52% and the CSI down 1.03%. The ASX 200 closed up 0.40%. European markets are either flat or marginally down in the early past of the morning trading session; STOXX index is down 0.06%, FTSE up 0.10%, CAC down 0.13%, DAX down 0.05%.
Looking at commodities ICE WTI oil is down 0.36% at $99.32 per barrel, with NYMEX natural down 0.52% at $3.65 per therm. COMEX gold is down 0.34% at $2311.30 per ounce with COMEX silver at $22.05 down 1.02%.
Looking towards the New York open the DJIA equity index future is flat, as is the SPX and NASDAQ equity index future.
Forex focus
The dollar was little changed at $1.3668 per euro early in London from $1.3681 yesterday. It touched $1.3704 on Oct. 18th, the weakest since February. The greenback added 0.1 percent to 98.31 yen after climbing 0.5 percent yesterday. The yen fetched 134.36 per euro after earlier touching 134.45, the lowest since Sept. 23rd.
The Aussie was little changed at 96.54 U.S. cents late in Sydney after reaching 96.79 yesterday, the highest since June 4th. New Zealand’s dollar was at 84.52 U.S. cents after losing 0.6 percent to 84.55. It advanced to as high as 85.25 on Oct. 17th, a level unseen since May 6th. Australia’s dollar was near a four-month high after leading mining company BHP Billiton raised its production forecast for iron ore, the country’s biggest export.
Sterling traded at $1.6127 early in London after rising to $1.6225 on Oct. 18th, the highest since Oct. 3rd. The U.K. currency was at 84.78 pence per euro. The pound was little changed against the dollar and the euro before a report that economists said will show Britain’s budget deficit narrowed in September from a year earlier. The pound appreciated 4.7 percent in the past six months, the best performer amongst the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro strengthened 3.8 percent, while the dollar weakened 1.3 percent.
Bonds
U.K. gilts lost 3.2 percent this year through yesterday. Treasuries dropped 2.2 percent and German bonds declined 1.9 percent. The 10-year yield was at 2.60 percent early in London. The price of the 2.5 percent note due in August 2023 was 99 5/32. The yield fell to 2.54 percent on Oct. 18th, the lowest since July 24th. It rose two basis points, or 0.02 percentage point, yesterday. Treasuries were little changed before the U.S. government releases a delayed report that economists predict will show employers added the most jobs since April.
