Asian equities kicked off the week in bullish mode with the Hang Seng reaching levels not seen for 10 years. This after Wall Street rose to record highs on Friday (Nikkei +0.85%, Hang Seng +0.85%, Shanghai Comp -0.11% & S&P/ASX + 0.56%). Bond markets were mixed with JGB's initially trading higher only to run into a wall of offers around the BOJ ops, which pushed the market back down towards Fridays close. Treasuries on the other hand opened weaker and tested the post CPI low before finding support and recovering to finish slightly lower on the day. Volumes were relatively light with only 73k TYZ7s traded. Aussie Bonds started the day unchanged but slowly ground out some gains to finish at levels not seen for a month. The Dollar traded lower at the start of the day but recovered to trade in positive territory after comments from Fed's Yellen, who said the economy was in good shape and that inflation would pick up. Elsewhere Oil spiked on fears of new Iran sanctions and increased tensions in Iraq, while Gold reached levels not seen for almost 3 weeks before slipping back to trade unchanged on the day.
Key Headlines:
-Fed’s Janet Yellen sees U.S. Economic Strength Warranting Gradual Rate Hikes
-Fed's Rosengren Sees Taylor as `Flexible' in Applying Rules. Expects Taylor, if picked as next Fed chair, to be pragmatic. Repeats his view December rate-hike needed.
-China September Consumer Price Index Y/Y, 1.6% vs. 1.6% expected. China September Producer Price Index Y/Y, 6.9% vs. 6.5% expected.
-Japan August Final Industrial Production 5.3pct y/y (prev 5.4pct)
-Japan August Capacity Utilisation 3.3pct m/m (prev -1.8pct)
-Rightmove report U.K. October house prices +1.1% m/m, +1.4% y/y to GBP313,435
London house prices +3.1% m/m, -2.5% y/y to GBP629,611.
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