Markets: Asian stocks fell, snapping a six-day rally, and the yen strengthened before US jobs data that may signal whether the Federal Reserve will pare stimulus. Ten-year Australian bond yields climbed, while copper advanced. (Bloomberg) (Financial Times)
Today: Europe: German IP, UK IP. US: Non-farm payrolls.
Optimism grows for developed economies: Yields on sovereign debt, which move inversely to prices, broke above key levels in Europe and the US, even after Mario Draghi, the European Central Bank president, warned about the fragility of the eurozone's nascent economic recovery. Yields on two-year US Treasuries rose above 0.5 per cent for the first time since June 2011 and markets priced in the first US Federal Reserve interest rate rise as early as December next year. In the UK, 10-year government bond yields rose above 3 per cent for the first time in two years. (Financial Times)
And UK interest rate expectations suggest the Bank of England will disregard its "forward guidance" and hike the 0.5 per cent rate in the final months of 2014 or the beginning of 2015 rather than in the back end of 2016, after strong data has transformed the economic outlook. (Financial Times)
Summers would face key 'no' votes for Fed: At least three Democrats on the Senate Banking Committee are expected to oppose Larry Summers if he's nominated to chair the Federal Reserve. "Democrats hold a two-vote majority on the 22-member panel, so the loss of three Democrats would make it impossible" for Summers to get to the full Senate vote unless some Republicans on the Committee provide backing. (Wall Street Journal)
"Regulators leading the world-wide investigation into interest-rate manipulation are in advanced talks with ICAP to settle a civil probe into the brokerage firm's alleged involvement in the scandal, according to people familiar with the negotiations." (Wall Street Journal)
Apple is investigating fresh allegations of poor working conditions at a Chinese factory said to be producing a cheaper iPhone, expected to be unveiled next week. It comes after China Labor Watch, a New York-based campaign group, said in a report that its investigations at Jabil Circuit's factory in Wuxi found employees working more than the 60-hour maximum working week that Apple requires of its suppliers. It also found employees were forced to work overtime. (Financial Times)
Blockbuster Verizon bond sale to test debt appetite: With Verizon likely to seek more than $20bn of financing from US investors in the coming weeks, the company and the banks underwriting the sale will soon discover whether that sharp jump in yields since May means that this debt package can attract buyers, who have not done well since Apple's offering. (Financial Times)
Watchdog launches Batista investigation: Brazil's market regulator, CVM, has launched a formal investigation into the dealings of Eike Batista and executives at OGX as anger grows among investors over the near-collapse of his flagship oil company. CVM said on Thursday it had opened an inquiry into whether Brazil's former richest man had broken market rules regulating the disclosure of information. (Financial Times)
Volatility in the yuan was near a three-year low after PBOC Governor Zhou Xiaochuan said China has ample measures to cope with any halt in quantitative easing policies. (Bloomberg)
Hyundai Motors announced a tentative deal with its union to end a strike that has cost the company hundreds of millions of dollars. (FastFT)
Activist shareholders have claimed another victory in the US as Timken, the Ohio-based engineering company, agreed to split in two following pressure from Relational Investors, the fund manager. Timken, which has a market capitalisation of about $5.6bn, will spin off its steel business within 12 months, it said, leaving it focused on bearings and power transmission equipment. (Financial Times)
Trading in yen soars (from 19 per cent in 2010 to 23 per cent this year) on "Abenomics" drive: A triennial survey from the Bank for International Settlements found trading in foreign exchange markets averaged $5.3tn a day in April 2013, up from $4tn three years ago – with the rising popularity of FX forwards and options accounting for almost a quarter of the growth. (Financial Times)
"Trading in the Chinese currency, also known as the renminbi, has more than tripled over the past three years, to $120 billion a day in 2013, the BIS said, referencing survey data from April. Daily U.S. dollar trading in 2013 has averaged $4.65 trillion." (Wall Street Journal)
ON FT ALPHAVILLE
Gold, paper, scissors, lizard, e-money
London's extraordinary lead in FX
The pictorial Indian FX swap
COMMENTS & CURIOS
A good start by India's new broom (Financial Times)
India's middle class and the rupee (Bloomberg)
Regulators take aim at recycled securities (Financial Times)
Japan's shrinking shinkin (Reuters)
Shale boom won't allow US to disengage from Middle East (Financial Times)
Australia's central bank mangles its message (Reuters)
Kagame long read (New York Times)
OVERNIGHT MARKETS: varied
Asian markets
Nikkei 225 down -123.62 (-0.88%) at 13,941
Topix down -7.85 (-0.68%) at 1,150
Hang Seng up +56.45 (+0.25%) at 22,654
US markets
S&P 500 up +2.00 (+0.12%) at 1,655
DJIA up +6.61 (+0.04%) at 14,937
Nasdaq up +9.74 (+0.27%) at 3,659
European markets
Eurofirst 300 up +8.72 (+0.72%) at 1,224
FTSE100 up +57.70 (+0.89%) at 6,532
CAC 40 up +26.38 (+0.66%) at 4,007
Dax up +39.06 (+0.48%) at 8,235
Currencies
€/$ 1.31 (1.31)
$/¥ 99.79 (100.11)
£/$ 1.56 (1.56)
Commodities ($)
Brent Crude (ICE) down -0.04 at 115.22
Light Crude (Nymex) up +1.20 at 108.37
100 Oz Gold (Comex) down -1.10 at 1,372
Copper (Comex) unchanged 0.00 at 3.24
10-year government bond yields (%)
US 2.99%
UK 3.05%
Germany 2.05%
CDS (closing levels)
Markit iTraxx SovX Western Europe +1.01bps at 90.5bp
Markit iTraxx Europe +0.43bps at 105.6bp
Markit iTraxx Xover -2.53bps at 414.98bp
Sources: FT, Bloomberg, Markit
