Markets: Equities were under pressure as it became increasingly difficult for markets in Asia-Pacific to ignore the US government shutdown, as hopes for a quick resolution to the budget impasse faded. But though losses were broad, they were not deep. (Financial Times)
White House rejects demands to negotiate on shutdown: Obama will not back away from his refusal to negotiate with Republicans over America's debt limit, his senior economic advisers said, but the administration has left open the door for a short-term increase in borrowings. (Financial Times) The partial shutdown of the federal government ended its first week on Monday without any bipartisan meetings held or planned. (NYT)
China and Japan warn US on default: "China and Japan ratcheted up pressure on the US to avoid an unprecedented US default on its debt as Democrats and Republicans continued their stand-off over the budget in the second week of a US government shutdown." (Financial Times)
Penalties planned for banks receiving ECB aid: "EU regulators overseeing next year's long-awaited stress tests of the region's banks are preparing to penalise any lender that remains reliant on the European Central Bank's landmark cheap funding scheme." (Financial Times)
SEC sees flaws in new Treasury asset manager report which found that activities of asset managers could pose risks to the broader marketplace. The SEC, however, "had been quietly advocating for major changes to the study for months, according to the sources." A concern stems from an earlier draft of the report that "the agency felt exaggerated the riskiness of the business." (Reuters)
Argentina suffers setback in battle with 'holdout' creditors after the US Supreme Court declined to consider an appeal to reverse a ruling by an appeals court that had ordered the country to pay the "holdouts" in full. Argentina would continue fighting its case against Elliott Associates, a New York-based hedge fund, "with all the legal resources available", finance secretary Adrián Cosentino said. (Financial Times) (FTAV)
Japan's current account surplus fell nearly 64 per cent in August, versus forecasts expecting an 18 per cent gain. (FastFT)
China's service sector is expanding "substantially" below trend: The Markit/HSBC services PMI came in at 52.4 last month, indicating a deceleration from the 52.8 level in August. (FastFT)
Alcatel-Lucent will cut a net 10,000 jobs across the world by 2015, including 900 in its domestic French market, as part of a strategy to slash €1bn in costs from the lossmaking telecoms equipment maker. (Financial Times) (WSJ)
Icahn takes nearly 6 per cent stake in Talisman Energy the Canadian oil-and-gas company whose efforts to restructure have had mixed results. (WSJ)
Monte dei Paschi board approves €2.5bn capital increase demanded by Brussels as it fights to avoid nationalisation. It also agreed 8,000 job cuts by 2015, the closure of 400 branches, reduction in the salaries of top managers and asset sales. Analysts wonder where willing new investors will be found. (Financial Times)
Zoellick, the former president of the World Bank, is rejoining Goldman Sachs as chairman of the bank's board of international advisers. (Financial Times)
World Bank to cut $400 million from budget in reorganization: "[S]avings will be phased in over three years and mark an 8 percent cut from the bank's current $5 billion in annual expenses..." (Reuters)
"Japan's Government Pension Investment Fund, the world's largest manager of retirement savings, isn't ready for Abenomics, according to the head of an expert panel advising on public investments... "The majority of the panel thinks the GPIF is exposed to too much interest-rate risk," Ito said." (Bloomberg)
COMMENTS & CURIOS
Abe interview: 'I am convinced our road is the only way' (Financial Times)
Hilsenrath: mixed signals from the Fed are a product of mixed views within (WSJ)
Obama, the debt ceiling and the 14th Amendment: why the pass? (NYT)
America cannot live so carelessly forever (Financial Times)
It is high time Argentina talked to its creditors, writes Elliott (Financial Times)
The watery tomb Europe tolerates (NYT)
India to stick with austerity despite looming election (Reuters)
OVERNIGHT MARKETS
Asian markets
Nikkei 225 up +33.98 (+0.25%) at 13,887
Topix up +0.35 (+0.03%) at 1,148
Hang Seng up +222.96 (+0.97%) at 23,197
US markets
S&P 500 down -14.38 (-0.85%) at 1,676
DJIA down -136.34 (-0.90%) at 14,936
Nasdaq down -37.38 (-0.98%) at 3,770
European markets
Eurofirst 300 down -2.65 (-0.21%) at 1,241
FTSE100 down -16.60 (-0.26%) at 6,437
CAC 40 up +1.33 (+0.03%) at 4,166
Dax down -31.39 (-0.36%) at 8,592
Currencies
€/$ 1.36 (1.36)
$/¥ 96.93 (96.69)
£/$ 1.61 (1.61)
Commodities ($)
Brent Crude (ICE) down -0.28 at 109.40
Light Crude (Nymex) down -0.10 at 102.93
100 Oz Gold (Comex) unchanged 0.00 at 1,325
Copper (Comex) unchanged 0.00 at 3.29
10-year government bond yields (%)
US 2.62%
UK 2.73%
Germany 1.81%
CDS (closing levels)
Markit iTraxx SovX Western Europe -0.66bps at 82.06bp
Markit iTraxx Europe +0.8bps at 98.38bp
Markit iTraxx Xover +3.06bps at 391.28bp
Sources: FT, Bloomberg, Markit
