Finexo Market News and Analysis

• FX: USD is lower and the market is so far not too impressed by the Paulson/Bernanke Plan.

• Fixed Income: Bunds rallying towards 114. Treasuries still offered. JGB’s seem to have bottomed out.

• Stocks: Most sessions moderately down.

• Commodities: Mostly ranging, but precious metals looking bid.

• In what has reflected the fact that the bank problems are not limited to American Banks, Hong Kong’s Bank of East Asia has now come under the strain of rumors of a bank run, although these rumors have been denied by the authorities and bank management. Hong Kong has not had any bank runs since 1993, the creation year of Hong Kong Monetary Authority.

• In a sign of further trouble to the global liquidity, Chinese banking regulators are speculated to be blocking Chinese domestic banks from lending to US financial Institutions in the inter bank markets. This has however has been denied by the Chinese Authorities.

• Facing a public discontent and resistance by the Congress, Treasury Secretary Paulson has stated his willingness to accept the changes to the rescue package that would ascertain that the bank executives are not unduly compensated within the rescue package and that the government could buy direct equity stakes in the firms being assisted.

• In a congressional hearing yesterday, the Fed Chairman Bernanke has repeated his warning over the serious threats to the financial system and highlighted that the spillover effects from the credit crisis to households and businesses can be already be seen.

• President Bush was later in a speech confirming the message from Bernanke/Paulson. The speech was surprisingly gloomy and compared the current crisis with that of the Great Depression.