Spanish assets outperform after Scottish 'NO' vote

Notes/Observations

- Spanish bonds outperform following Scotland 'NO' vote on referendum; Gilt yields rise as focus returns to BoE policy outlook (10-yr highest since early Aug, 2-yr highest since early July); Short Sterling Futures generally lower

- GBP pares gains following Scottish vote

- French President Hollande said the Euro has come down to a more suitable level

- USD/JPY trades at multi-year highs above 109.40

- BoJ Gov Kuroda said he did not see any large problem with current fx moves, as some Japanese officials have warned about rapid fx moves.

- (JP) Japan Fin Min Aso: Did not discuss currencies with US Treasury Sec Lew at G20

- Commodity currencies underperform amid weakness in commodity prices and higher US bond yields.

- UK-companies with North-Sea exposure and UK banks outperform after Scottish vote; Spain's IBEX-35 outperforms

- Nikkei225 hits 7-year high; BoJ's Iwata said welcome to see Japan stocks level to rise close to fair value

- Alibaba to start trading today

- G20 remains concerned about global growth

Key Economic Data in session

- (EU) EURO ZONE JULY CURRENT ACCOUNT (SEASONALLY ADJ): €18.7B V €18.6B PRIOR; CURRENT ACCOUNT NSA (UNADJ): €32.3B V €24.8B PRIOR

- (DE) GERMANY AUG PPI M/M: -0.1% V 0.1%E; Y/Y: -0.8% V -0.8%E

- (DE) Germany July Conference Board Leading Economic Index m/m: -0.2% v -0.3% prior

Fixed Income

- (UK) S&P: Scotland referendum vote doesn't affect UK AAA sovereign rating (outlook stable)

- (IN) India sells total INR120B vs. INR120B indicated in 2020, 2024, 2032 and 2043 bonds

Equities

Indices [Stoxx50 +0.7%, FTSE 100 +0.7% at 6,871, DAX +0.9% at 9,882, CAC-40 +0.5% at 4,485, IBEX-35 +1.1% at 11,132, FTSE MIB +0.8% at 21,303, SMI +0.4% at 8,863, S&P 500 Futures +0.3% at 2,011]

Market Focal Points/Key Themes: Equity markets open higher following Scottish 'NO' vote (led by Spain's IBEX-35), UK banks outperform, SAP declines on acquisition and results from Oracle, Alibaba begins trading later today]

By Sector

Industrials [Evraz EVR.UK +1.5% (IPO for North America unit)]
Basic Materials/Resources [CropEnergies CE2.DE -2% (cut outlook), Arkema AKE.FR -1.5% (acquisition)]
Technology [Aixton AIXA.DE +2.5% (broker commentary); SAP SAP.DE -2.5% (acquisition, earnings from Oracle)]
Telecom [Deutsche Telekom DTE.DE +2% (broker commentary)]
Stoxx50 sectors [Telecom +1.4%, Industrials +1%, Consumer Cyclical +0.8%, Basic Materials +0.8%, Financials +0.8%, Consumer Non-Cyclical +0.7%, Utilities +0.6%, Energy +0.4%; Technology -1%]

 FIXED INCOME/FX/COMMODITIES

Currencies/Fixed Income:

- USD/UAH Trades at all-time high above 14.3 as Ukraine economy remains in turmoil

- GBP/USD was marginally higher during the beginning of European session after results overnight all but assume Scotland will remain in the UK. Most of the Sterling move was overnight trading from 1.63 to 1.65 when the election was called. Post election blues saw the currency trade back down towards 1.6350. Implied vols have come off severely with 1-week vol dropping the most in 20 years.

- USD/JPY the currency pair rallied above 109 (fresh 6 year high) after a 'No' vote for Scotland independence and comments by PM Abe about starting GPIF reforms 'as early as possible' sparked a risk-on move in markets with traders selling the 'safety' JPY currency

Press/Speakers

- (UK) Scotland votes No in referendum on independence; Final results 45% for Yes vs 55% for No

- (ES) Spanish Catalonia region chief Mas: won't call for vote for independence today; Convinced Catalonia to hold independence vote on Nov 9th

- (PL) Incoming Poland PM Kopacz names new cabinet; sticks to tested Polish economic team; Szczurek to remain Fin Min

- (DE) German Chancellor Merkel: Construction investment to grow 4% in real terms in 2014

- (JP) Japan Fin Min Aso: Did not discuss currencies with US Treasury Sec Lew at G20

Looking Ahead

- 06:00 (IS) Iceland to sell Bonds

- 06:00 (EU) ECB announces 3-Year LTRO Repayment vs. €6.0B prior

- 06:05 (UK) DMO to sell combined £5.0B in 1-month, 3-month and 6-month Bills (£1.5B, £1.5B and £2.0B respectively)

- 06:45 (US) Daily Libor Fixing

- 07:00 (BR) Brazil Sept IGP-M Inflation 2nd Preview: No est v -0.4% 1st preview

- 07:30 (TR) Turkey Central Bank TCMB Survey of Expectations

- 07:30 (IN) India Forex Reserves w/e Sept 12th: No est v $317.3B prior

- 08:00 (ES) Spain Debt Agency (Tesoro) announces specific bonds to be issued in upcoming auction

- 08:00 (BR) Brazil Sept IBGE Inflation IPCA-15 M/M: No est v 0.1% prior; Y/Y: No est v 6.5% prior

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (CA) Canada July Wholesale Trade Sales M/M: No est v 0.6% prior

- 08:30 (CA) Canada Aug CPI M/M: -0.1%e v -0.2% prior; Y/Y: 2.0%e v 2.1% prior; Consumer Price Index: No est v 125.7 prior

- 08:30 (CA) Canada Aug CPI Core M/M: +0.2%e v -0.1% prior; Y/Y: 1.8%e v 1.7% prior

- 08:30 (CA) Canada Aug CPI (Seasonally adj M/M: no est v 0.1% prior; CPI Core (Seasonally adj) M/M: No est v 0.1% prior

- 09:00 (BE) Belgium Sept Consumer Confidence Index: No est v -11 prior

- 09:00 (MX) Mexico Q2 Aggregate Supply and Demand: No est v 2.4% prior

- 10:00 (MX) Mexico Central Bank Monetary Policy Minutes

- 10:00 (US) Aug Leading Index: 0.4%e v 0.9% prior

- 17:00 (CO) Colombia July Trade Balance: No est v -$64.0M prior; Total Imports: No est v $5.0B prior