Morning Update – 09/12/2016 – by Arjun Lakhanpal

Morning all.. Wall St reacted well to the ECB meeting as European stocks rallied and the S&P finished up 0.22% as the action was really elsewhere. The Asian markets followed the strength of the European markets with the Nikkei up 1.23% as USDJPY rallied on the back of higher US yields. It was FX and bond markets where all the action was and the EUR fell steeply as Draghi is increasing the central banks balance sheet. He is also steepening the yield curve which saw bank shares rally steeply but the forecasts for inflation were weak still and yields look likely to remain very low for a long time whilst US yields rise; hence the EUR weakness against the dollar. Sources: some ECB policymakers argued in favour of a 12-month extension; Weidmann raised concerns about over-committing as it may limit ECB’s scope to react to incoming economic data.. USDJPY took out yesterday’s highs and rising US yields and the 10yr yields sits at 2.425% at present.. Oil is up 0.5% and DAX futures are down marginally after a steep rally yesterday. China Nov CPI beat: 2.3% vs 2.2% cons; strength in food main factor pushing up headline (Food CPI 4.0% y/y; Non-Food 1.8% y/y)..China Nov PPI beat: 3.3% vs 2.3% cons (rises at fastest pace since Oct 2011. This may see China export less deflation.. Not much data today but this morning we get French IP, UK Trade balance and Construction output.. Good luck..