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EUROPEAN OPENING NEWS INCLUDING: WTI crude futures traded lower overnight

Published: 08:22 30 Oct 2013 GMT

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Asia

Movements in Chinese money market rates reflect temporary liquidity shortage and the PBOC is not tightening policy by limiting interbank funding, according to a unidentified person from the PBOC. (Newswires) China's overnight repo weighted average rate hit highest since June at 5.28%, whilst the 7 day repo weighted average rate also hit highest since June at 5.68%.

Japanese Industrial Production (Sep P) M/M 1.5% vs. Exp. 1.8% (Prev. -0.9%); Y/Y 5.4% vs. Exp. 5.5% (Prev. -0.4%)

Japan's government raised its assessment on industrial output which was the first upgrade in 7 months, stating that industrial output is picking up.

The BoJ is likely to raise FY 2014 Japan GDP forecast from 1.3% on government stimulus measures. (Sankei)

10yr JGBs traded higher overnight (+19 ticks at 145.12) which saw the 10yr yield fall to its lowest since May 9 at 0.590%, amid the BoJ in the market for JPY 1trl in government debt. The Nikkei 225 traded higher (+1.25%) as as positive sentiment rolled over to Asia from US where equities closed at record highs, supported by encouraging earnings reports and continued expectations of the Fed to delay tapering at today’s FOMC meeting. (RANsquawk)

Europe

EU's Rehn sees a quite broad-based economy recovery in Europe and said that rapid initial fiscal tightening was essential in crisis and that Europe can now afford slower fiscal consolidation. (Newswires)

Eurogroup head Dijsselbloem said sees a clean exit for Spain from it's banking bailout program, with no credit line needed. Dijsselbloem added that it is unlikely that banks will ever need direct ESM aid. (FAZ)

Barclays month-end extension: Euro Agg +0.08y

UK

BoE governor Carney said 7% unemployment threshold right time to adjust policy. Carney said won't tighten policy until recovery is sustained. (Walesonline) Carney added that the UK's recovery was being driven by the housing market. 

Barclays month-end extension: Sterling Agg +0.02y

FX

In the FX market, AUD initially continued weakening after breaking below the 0.95 handle in yesterday’s session. However, AUD then found support and pared its declines amid market talk of Asian central bank demand for AUD/USD. NZD/USD saw volatile moves, first spiking lower after Moody's vice-president Hess said they discussed cutting New Zealand from AAA. NZD then recovered after Moody’s added they discussed it, but decided not to downgrade New Zealand and that they are comfortable with New Zealand's AAA rating. Elsewhere, the rest of the major pairs trade relatively flat as participants remain sidelined ahead of the FOMC policy meeting. (RANsquawk)

Commodities

WTI crude futures traded lower overnight (down USD 0.48 at USD 97.72) with prices weighed following the large increase in API crude oil inventories of 5.9mln. (RANsquawk)

US API Crude Oil Inventories (Oct 25) W/W 5900k vs. Prev. 3000K 

- Cushing Crude Inventory (Oct 25) W/W 2200k vs. Prev. 423K

- Gasoline Inventories (Oct 25) W/W 740k vs. Prev. -510K

- Distillate Inventory (Oct 25) W/W -2700k vs. Prev. 815K

US

Treasuries finished at their best levels of the day although traded within a very tight range ahead of the FOMC decisions from the October policy setting meeting tomorrow. USD 96bln in supply this week weighed in early trade although was largely overshadowed by month-end flows, particularly after an uneventful 5y which saw the yield stop on the WI at the bidding deadline and was absorbed without any issue. The 10y yield back down towards 2.5% and well off highs of near 3% seen heading into the past FOMC decision in September. At the pit close T-notes settled at 127.23, up 5 ticks. Overnight, T-notes rose further, adding 5+ ticks to trade at 127.28+ as of 0620GMT. (RANsquawk)

Ahead of today's FOMC decision catch up with Fed Watcher Hilsenrath who said this weekend that the Fed's taper isn't off the table for December but will more likely happen in March. (CNBC). For further details from the interview please visit the following link https://www.cnbc.com/id/101134456.

Barclays month-end extension: Treasury +0.07y

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