Equity Indices

The S&P 500 and Nasdaq finished last Tuesday's session slightly higher, breaking a three-day string of declines that marked their worst losses since 2011, while the Dow finished in negative territory for a fourth session on lingering worries about global demand.

 

Interest Rates

 

Benchmark Bond Yields

The Treasury on Tuesday accepted Euro 10 million in 28-day Treasury Bills at an average yield of 0.045% and Euro 16 million in 182-day Treasury Bills at an average yield of 0.154%. Outstanding Treasury Bills amount to Euro 298,917,000 - a decrease of Euro 350,000 from the previous week.

 

Euro zone industrial production fell more than expected in August, reflecting a slump in the output of capital goods used for investment and raising concern that the economy is weaker than previously thought. The European Union's statistics office Eurostat said that production in the 18 countries sharing the euro fell 1.8 percent in August from July for a 1.9 percent year-on-year decline. Eurostat also revised down industrial output growth for July to 0.9 percent month-on-month from 1.0 percent and to 1.6 percent year-on-year from 2.2 percent.

Gloomy data on the euro zone's biggest economy, Germany, spooked financial markets and added weight to calls for faster efforts to revive public investment at a meeting of European Union finance ministers. The German government sharply lowered its growth forecasts for this year and next, euro zone industrial production tumbled in August, and a closely watched German economic sentiment index registered its first negative reading since November 2012, at the height of the euro zone crisis.

British inflation slowed sharply in September to its lowest level in five years, further reducing pressure on the Bank of England to start raising interest rates even as the economy grows strongly. Consumer prices rose by a weaker-than-expected 1.2 percent on the year in September, down from 1.5 percent in August, the Office for National Statistics said on Tuesday.  Core inflation, which excludes much of the effect of volatile food and energy costs, also slowed, hitting its lowest level since April 2009.

 

Japan's leading gauge of capital spending rose for a third straight month in August, in a tentative sign firms are investing their profits in plants and equipment that could bolster growth in the world's third-largest economy.   But analysts say the 4.7 percent gain in core machinery orders is not enough to dispel concerns the economy is losing traction even as the Bank of Japan keeps ultra-loose monetary policy and the government stands ready to deploy fresh stimulus.

 

 

Forex

The Sterling slipped to its weakest level since November 2013 against the dollar after a sharp slowdown in UK inflation prompted traders to push back expectations of when interest rates will rise well into 2015 whilst the Canadian dollar dropped to its lowest level against the US dollar in more than five years.