AUD gains as Chinese GDP beats estimates

•     ECB buys covered bonds in modest start to “QE-light”

–    Buys estimated EUR 800mn of French and Spanish covered bonds

–    Modest move fails to reassure markets; peripheral bond yields move higher nonetheless, European stocks fall

–    By contrast, US markets perform well:  stocks end higher, VIX falls steadily

•     USD/JPY falls most as Japanese stocks fall, politics get messy

–    Two female Cabinet ministers resigned amidst allegations of financial impropriety

–    Abe’s popularity is nearing the danger level; will make it hard for him to raise the consumption tax again (decision due by end of this year)

–    Abandoning “Abenomics” could cause yen to strengthen, or could force BoJ to increase monetary stimulus and weaken yen further

•     AUD gains as Chinese GDP beats estimates

–    GDP slows nonetheless; no big plan by Chinese govt to boost growth

–    RBA still complaining about strong AUD; likely to weaken again, in my view

•     Today:–    Eurozone, UK: No major indicators out

                               US: Existing home sales for September expected to increase