Finexo: Forex markets 15th Sept 2008

• FX: EURUSD forcefully rising to 1.4481. USD selling off on the Lehman and Merrill news. CHF and JPY only moderately higher.

• Fixed Income: Treasuries rallying more than a figure. Bunds will follow through today. JGB’s closed.

• Stocks: European session up +2% on Friday, but will gap open lower today. Nikkei closed. ASX down by 1.5%.

• Commodities: Precious metals only slightly higher despite the really weak dollar. Crude Oil trading below $100/bbl for the first time since April.

• Very, very, very negative news from The World of Finance: Barclays walk away from negotiations to take over Lehman (since deal was not Fed/Treasury (sponsored).Lehman now filing for bankruptcy. Make no mistake; there will be tonnes of losing among its counterparties. Financials will bleed this week.

• AIG might seek $40B help from the Fed after horrific losses, according to the WSJ. AIG very susceptible to downgrades.

• Merrill Lynch also under considerable pressure. Now discussing merger with Bank of America.

• FOMC meeting tomorrow. STIR Futures have changed, now indicating a 12% chance of a rate CUT in stead of a hike.

• US Treasury Officials have urged Japanse financial institutions not to dump bonds issued by FNM and FRE on the market. What a desperate move!