•
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
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