TOP
UK business daily City AM says UK banks set for an up to three-notch downgrade by Moody’s. The downgrade, expected as early as today, will impact 14 banks and building societies, the paper says. City AM said Moody’s refused to confirm the move. {http://bit.ly/nstonV}
IMF staff see AUD overvalued by 10-20% in medium term. Central bank has “ample scope” to cut interest rates {http://buswk.co/p32zsR}
Obama said Congress should pass his $447 billion jobs bill quickly to “guard against another downturn” in the U.S. economy. {http://bit.ly/oOBG7n}
The FT notes that Europe’s leaders are seemingly picking up the pace on bank recapitalisation, with the EC President Barroso saying he will soon outlines plans for a Europe-wide recapitalisation. However, the FT notes that while Barroso’s comments follow the current mood music, the Commission “does not have the power to impose capital injections by national governments.”{http://on.ft.com/oTg9Lb}
EUROPE
Merkel and Sarkozy are divided on how to combat the Greek debt problem but must make final decisions soon. {http://bit.ly/puElQX}
Telegraph: Bank of England’s QE2 may reach ?500bn, economists warn {http://tgr.ph/pAQNwJ}
Dexia announced that it was in advanced talks to sell its Luxembourg unit. {http://on.ft.com/r5SloM}
Nervousness is growing in Whitehall that the gov might have to inject further capital into RBS as part of a European effort to recapitalize the continent’s banking system. {http://on.ft.com/qiK7d0}
Loosening of UK monetary policy shows King has lost faith in European govs’ ability to resolve the EZ debt crisis, says Bloomberg,{http://bit.ly/n5o2OF}
British trade unions are balloting millions of workers about a strike over changes to public sector pensions. {http://reut.rs/oAvk9W}
Soros has lost a case at the European Court of Human Rights to have his criminal conviction for insider dealing quashed {http://on.ft.com/pv5X0U}
Shares in major European economies suffered there biggest quarterly loss in 9 years.{http://reut.rs/oZUiUt}
The Dutch parliament approved extending the powers of the EFSF. {http://reut.rs/qro3CA}
MOODY’S CUTS SENIOR DEBT, DEPOSIT RATINGS OF 9 PORTUGUESE BANKS
US
Obama urged European leaders to act faster to tackle the sovereign debt crisis. {http://reut.rs/nMNZO5}
The U.S. government could unveil a plan in a few weeks to help up to one million struggling borrowers refinance their mortgages at lower rates. Anxious to do more to help the depressed housing market, TreasSec Geithner told lawmakers he was hopeful the federal housing regulator would soon sign on to a new plan to help homeowners take advantage of low interest rates.
US 30-y mortgage rates have fallen below 4% this week for the first time ever. {http://on.ft.com/nEXPEh}
Legislation aimed at punishing China for undervaluing its currency advanced through the Senate on Thursday. {http://on.ft.com/q1D1iz}
Corporate repatriation legislation proposed by Senators Kay Hagan and John McCain would let U.S. businesses bring home offshore profits at an 8.75 percent
tax rate.
Investors added about $264 million to U.S. municipal-bond mutual funds in the week through yesterday, Lipper US Fund Flows said. It was the fifth straight week of inflows, the longest stretch of additions in a year. In 2010 there were 14 straight weeks of investments in muni mutual funds through the week ended Oct. 6.
ASIA
Japan data: Japan september FX Reserves $1.20trn vs August record $1.219trn
The contraction in construction activity deepened further in September with the Australian Industry Group’s performance of construction index falling to the lowest level since February 2009 (16th consecutive month of contradiction). The seasonally adjusted index fell by 2.1 points in September to 30.0 {http://bit.ly/n76Yqr}
Australia’s credit market advantage to New Zealand increased to the highest level in more than two years after the S&P downgrade. {http://bit.ly/n7Da5w}
S.KOREA C.BANK CHIEF: 2012 ECONOMIC GROWTH SEEN AT LOW 4 PCT RANGE VS EARLIER FCAST OF 4.6 PCT
The Monetary Authority of Singapore (MAS) has just announced the next policy meeting to be 14 October. HSBC preview here {http://bit.ly/qkL2Ny}
Asian stocks rose on Friday and the EUR clung to gains after EZ policymakers moved to shore up struggling banks. {http://reut.rs/nhSSDt}
Vietnam’s CB increased its refinancing rate for the first time since May, as the nation tries to steady its currency and tame Asia’s fastest inflation. {http://bloom.bg/o14nNT}
CORPORATE
Carlos Ghosn, chief executive officer of Nissan Motor Co., said Japan faces a “hollowing out” of its industrial base should the government fail to take steps to counter the yen’s rise. {http://buswk.co/qedugd}
OTHER MARKETS
NIKKEI 8631 (+1.3%), Hang Seng 17779 (+3.5%), S&P/ASX 200 4162 (+2.3%), Shanghai SE Composite 2359 (-0.3%), Kopsi 1760 (+2.9%) – As of 06.30 GMT
Gold last trades at 1658 (+0.4%), Silver at 32.20 (+0.6%)
WTI crude last at 82.67 (+0.1%), Brent crude at 105.75 (flat)
2yr US Treasuries at .2600 (-1.5%), 10yr at 1.9846 (-0.25)
Commodities and crude oil prices rallied on the back of expectations of easier monetary conditions after the BoE and ECB announcements.
{http://on.ft.com/qtj6ox}
HSBC Global Research