While the biggest micro news of the weekend is certainly the report that Hewlett-Packard has finally thrown in the towel on organic growth (all those thousands laid off over the past ten years can finally breathe easily - they were not fired in vain), and has proceeded to do what so many said was its only real option: splitting into two separate companies, a personal-computer and printer business, and corporate hardware and services operations (which will certainly lead to even more stock buybacks only not at one but two companies) which in turn has sent its stock and futures higher, perhaps the most notable development in the macro world is Japan's realization finally that the weaker Yen is crushing domestic businesses, which has resulted in the USDJPY sliding to lows last seen at Friday's jobs report print, and also generally leading to across the board weakness for the dollar, whose relentless surge in the past 3 months is strongly reminiscent of the euphoria following the Plaza Accord, only in the other direction (and making some wonder if the Plaza Hotel caterer are about to see a rerun of September 22, 1985 in the coming weeks). Some of the key overnight headlines: ABE: ENERGY PRICE RISES FROM WEAK YEN IMPACT CONSUMERS, SMES: BBG ABE: WILL TAKE MEASURES ON WEAK YEN, WATCH EFFECTS: BBG Not helping Yen weakness is the WSJ report, previously noted here, that the "GPIF Unlikely To Announce New Portfolio Until November", a delay which could rattle investors hoping fund will invest more in stocks... and pushing the USDJPY lower. Of course, all of this is connected to what we said last night would likely be the admission by the Japanese government that the country has once again entered a recession. Aside from that, in primary presidential polling in Brazil, Aecio Neves has finished second, surprising many and entering the run-off against Dilma Rousseff in late October. Many analysts see Brazilian assets benefitting today, with UBS and Nomura arguing that this increases the chances that Rousseff will not be re-elected. Of course, Brazil may simply be doing what the "developed" nations do so well, and rig election polls and outcomes, merely to obtain the desired short-term market outcome; we will know for certain in a few weeks. It has been a mixed start to Asian markets overnight amid a holiday-thinned session. Singapore and Australia are out on holiday and China will not officially return from its National Day Golden Week until Wednesday. The Nikkei and the Hang Seng are up +1.2% and +1.1%, respectively as we type. Bourses in Taiwan and Korea are off to a softer start to the week. The situation in HK has eased overnight as protestors allowed government workers to access the government complex which had been blocked since last Friday. Major thoroughfares are still closed on Monday but schools that were shut have reopened and the numbers of protestors have dwindled allowing some form of normalcy to return after over a week of protests. Meanwhile China’s state-run media has ruled out any possibility of Beijing changing its mind on HK’s political reforms. Less than 20 protesters in front of the Chief Executive office in Admiralty, about 1/10 of the number yesterday. pic.twitter.com/e28Ct7943s — Alan Wong (@byAlanWong) https://twitter.com/byAlanWong/status/519069162786656256!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?'http':'https';if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+"://platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs"); Staying in Asia, the World Bank has reduced its GDP growth estimates for China in 2014 to 7.4% from a previous forecast of 7.6%. Looking into 2015, the World Bank now sees growth at 7.2% from a previous forecast of 7.5%, mainly as the government seeks to put the economy on a more sustainable path with policies addressing financial vulnerabilities and structural constraints. However, except for China the World Bank is rather constructive on the rest of the region. The institution sees growth for developing East Asian countries (ex China) to bottom out at 4.8% this year before rising to 5.3% next year as exports rise and domestic economic reforms advance in the large Southeast Asian economies. Staying on EM but on the other side of the globe we saw the completion of the first-round vote of the presidential election in Brazil on Sunday. European stock futures trade higher, with the DAX outperforming as it catches up on global equity strength on Friday, as German stocks were closed for Reunification Day. Germany’s progress has been slightly impaired by weakness in Siemens shares, who remain the only German stock in the red after warning their energy unit margins would be lower than expected in the future due to pricing pressure in wind turbines. The usual post-payrolls lull in the economic data calendar this week will be populated by an eventful week of high level meetings around the globe. The IMF and World Bank annual meeting in Washington starts this Friday although there are plenty of events/speeches ahead of the official proceedings. Furthermore, we also have a few central bank rate meetings and a senior leadership summit between China and Germany. If that wasn’t enough company analysts will also be sharpening their pencils as we kick off the Q3 earnings season with Alcoa’s results this Wednesday. Bulletin Headline Summary from RanSquawk and Bloomberg European stock futures trade strongly, as the impressive Wall Street close on Friday buoys European and Asia-Pacific markets USD-index pulls off multi-year highs printed on Friday as traders book profits, helping to lift EUR/USD on little volume The week gets off to a slow start, with no tier 1 releases due today, as the market looks ahead to FOMC minutes and the beginning of earnings season with Alcoa (AA) due on Wednesday Treasury yields mostly steady in overnight trading as German factory orders drop the most since 2009; this week will feature Treasury auctions of $27b 3Y, $21b 10Y (reopen) and $13b 30Y (reopen) starting tomorrow. Minutes from FOMC meeting of Sept. 16-17 will be released Wednesday; week features heavy Fed speaker calendar starting with Kansas City’s Esther George tonight at 8:30pm ET Lloyds Banking Group, Britain’s largest mortgage provider, is poised to eliminate thousands of jobs in what may be the biggest round of cuts since at least 2011, a person familiar with the matter said American banks are loading up on U.S. government debt, a sign they remain cautious on the economy even with the jobless rate at a six-year low and corporations at their healthiest in a generation Goldman Sachs says investors shouldn’t rush to anticipate a rate increase from the Federal Reserve after jobs gains beat economist forecasts while BlackRock said it’ll happen sooner than expected S&P 500 companies are poised to spend $914b on share buybacks and dividends this year, or about 95% of earnings, data compiled by Bloomberg and S&P Dow Jones Indices show Greece’s creditors insist the country should retain precautionary backstops next year even as the government presented an almost balanced budget for the first time in decades Pro-democracy demonstrations in central Hong Kong dwindled after the start of talks with the government, with some roads and schools reopening as tensions eased that police were poised to clear protesters Seven of the people officials are monitoring most closely for signs of Ebola are health workers who had close contact with a man in Dallas who is fighting for his life against the virus, the Centers for Disease Control and Prevention said yesterday No IG priced Friday after seeing highest Thursday session of 2014 previous day, full week saw $18.9b, only the 12th time this year weekly volume failed to top $20b; no HY priced Friday, five deals for $2.7b priced last week, four deals totaling $1.65b MTD Sovereign 10Y yields mostly lower led by Portugal at -3.7bps. USD rises to highest level since June 8, 2010. Asian and European stocks mostly higher. U.S. equity-index futures rise. WTI crude, gold, copper rise US Event Calendar TBD: Fed issues labor mkt conditions index, Sept. Central Banks TBD: Bank of Japan issues monetary policy statement 11:30pm: Reserve Bank of Australia seen holding overnight cash target rate at 2.5% 11:00am POMO: Fed to purchase $1.4b-$1.7b notes in 2021-2024 sector ASIA Asia-Pacific equities started the week strongly, with the Nikkei 225 closing higher by 1.2% as Wall Street’s impressive close on Friday buoyed Japanese stocks, as the Hang Seng Index also rose, up 1.1%, as demonstrators allowed access to government buildings for usual business to resume. Elsewhere, The World Bank has cut China's growth forecast for the next three years as the country tackles structural reforms, seeing 7.4% growth this year, down from their prior forecast of 7.6% FIXED INCOME Bund futures opened unchanged, however early buying after disappointing German Factory Orders (-5.7% vs. Exp. -2.5%) pushed Bunds through Friday’s highs of 150.07, helping keep the peripheral European yield spreads against Germany slightly wider. Treasury futures have seen strength ahead of the CBOT open as spillover buying rooted in Bund strength and comments from Goldman Sachs’ chief economist Hatzius keeps T-notes on the front-foot. Hatzius believes the Fed will probably raise rates in Q3 2015 and will retain the ‘considerable time’ phrase in October’s policy statement. EQUITIES European stock futures trade higher, with the DAX outperforming as it catches up on global equity strength on Friday, as German stocks were closed for Reunification Day. Germany’s progress has been slightly impaired by weakness in Siemens shares, who remain the only German stock in the red after warning their energy unit margins would be lower than expected in the future due to pricing pressure in wind turbines. Hewlett-Packard (HPQ) – Co. is said to be planning to split into two separate Co.’s, a personal-computer and printers business, and corporate hardware and service operations, according to a personal familiar with the matter. (BBG) FX EUR/USD has squeezed higher throughout the morning as the market takes profit on short positions after the sharp sell-off on Friday. Nonetheless, the pair remains well below Friday’s highs seen at 1.2676. Furthermore, a bulk of the short-covering follows ECB’s Weidmann adding his name to the list of ECB members that have openly criticised the ECB’s Asset Backed Securities Purchase Program, stating that the ECB risk taking on a significant level of credit risk by paying too much for low-quality securities. NZD trades slightly higher however saw some pressure overnight as the 100DMA fell below the 200DMA at 0.8454, which also prompted a tick lower in AUD/USD in sympathy. In primary presidential polling in Brazil, Aecio Neves has finished second, surprising many and entering the run-off against Dilma Rousseff in late October. (BBG) Many analysts see Brazilian assets benefitting today, with UBS and Nomura arguing that this increases the chances that Rousseff will not be re-elected COMMODITIES WTI and Brent crude futures trade slightly firmer on light volumes as markets book profits on recent successful short positions, with WTI reclaiming the psychological USD 90/bbl handle and Brent testing USD 93/bbl. Price action in precious metals has been far more pronounced, as spot gold broke below its YTD lows, pushing platinum to its lowest level since September 2009 with silver also falling to the lowest since March 2010. * * * DB's Jim Reid concludes the overnight recap The usual post-payrolls lull in the economic data calendar this week will be populated by an eventful week of high level meetings around the globe. The IMF and World Bank annual meeting in Washington starts this Friday although there are plenty of events/speeches ahead of the official proceedings. Furthermore, we also have a few central bank rate meetings and a senior leadership summit between China and Germany. If that wasn’t enough company analysts will also be sharpening their pencils as we kick off the Q3 earnings season with Alcoa’s results this Wednesday. We’ll preview all those in a little more detail below but before all that let’s take a look at the trading session overnight. It has been a mixed start to Asian markets overnight amid a holiday-thinned session. Singapore and Australia are out on holiday and China will not officially return from its National Day Golden Week until Wednesday. The Nikkei and the Hang Seng are up +1.3% and +0.5%, respectively as we type. Bourses in Taiwan and Korea are off to a softer start to the week. The situation in HK has eased overnight as protestors allowed government workers to access the government complex which had been blocked since last Friday. Major thoroughfares are still closed on Monday but schools that were shut have reopened and the numbers of protestors have dwindled allowing some form of normalcy to return after over a week of protests. Meanwhile China’s state-run media has ruled out any possibility of Beijing changing its mind on HK’s political reforms (BBC). The better-than-expected payrolls report (248K v 215K expected) last Friday gave US equities, (S&P 500 +1.12%), US credit (CDX IG -3bp) and the US Dollar a boost. The Dollar strength is adding further negative pressure on other key currencies globally with the EUR, JPY and AUD now trading around 0.6%-0.7% below their pre-payrolls level at 1.25, 109.60 and 86.88, respectively as we type. Similar to equities, Asian credit is having a relatively quiet session overnight but the immediate focus should be on the iTraxx roll. The ISDA 2014 definitions for credit derivatives go live today. The new definition represents the biggest overhaul from ISDA in over a decade and, amongst other things, introduces greater bifurcation between Senior and Sub CDS contracts for banks mainly in response to the rollout of various bank resolution regimes and practices globally. The Asia iTraxx roll markets (from S21 to S22) are now being quoted at 22.75/23.75bp. Staying in Asia, the World Bank has reduced its GDP growth estimates for China in 2014 to 7.4% from a previous forecast of 7.6%. Looking into 2015, the World Bank now sees growth at 7.2% from a previous forecast of 7.5%, mainly as the government seeks to put the economy on a more sustainable path with policies addressing financial vulnerabilities and structural constraints. However, except for China the World Bank is rather constructive on the rest of the region. The institution sees growth for developing East Asian countries (ex China) to bottom out at 4.8% this year before rising to 5.3% next year as exports rise and domestic economic reforms advance in the large Southeast Asian economies. Staying on EM but on the other side of the globe we saw the completion of the first-round vote of the presidential election in Brazil on Sunday. At the time of this writing (London Monday 5am), Dilma Rouseff is enjoying a commanding lead of 41.59%, with more than 99% of the votes counted. Aécio Neves is receiving 34% of the votes followed by Marina Silva with 21% (CNN). Our EM strategists noted that it is a surprisingly strong support for Aécio, and markets will likely react in a bullish way today. Also on an encouraging note, the FT is suggesting that Q3 could be a good quarter for fixed income businesses for banks. Two senior US bank executives apparently said that their results for Q3 had been good thanks to recent pickup in market volatility. In particular, fixed income trading also received an additional boost in late September following the departure of Bill Gross from PIMCO. On the other side of Atlantic but also optimistic on Q3 European investment banking result is our European bank research head Matt Spick. In his recent note, he noted that whilst July and August were weaker months for primary activities, September was the month that made the difference. He also noted that both Rates and FX volatility picked up in September, which should drive better spreads and also client trading and hedging demand although he thinks Credit likely performed less well. More on the industry, in an attempt to make corporate bond trading more efficient, a group of 12 global banks are working together to set up a platform for buyers and sellers of corporate bonds. The initiative called 'Neptune' will not be for executing trades, rather it will link up banks and investors in the market and potentially some of the existing trading platforms they use. The banks involved are set to pay GBP30k each for the first phase of consultancy work and a dozen or so buy-side firms are also reportedly involved in the discussions (WSJ). We have a fairly light calendar today as far as key events are concerned. Things will pick up tomorrow with the release of the IMF’s latest World Economic Outlook and a speech on the economy by Fed’s Dudley. We also have monetary policy meetings in Australia, Indonesia and the conclusion of a two-day BoJ meeting tomorrow. On Wednesday the IMF will publish its latest Global Financial Stability Report whilst BoJ’s Kuroda will be speaking in New York. Washington will be the focus on Thursday with a press conferences held by IMF’s Chief Lagarde and World Bank’s President Kim ahead of the IMF/World Bank annual meeting on Friday. G20 Finance Ministers and Central Bankers will also meet on Thursday and Friday in Washington. ECB’s Draghi will also be speaking at the Bookings Institution on latest European developments and global central banking followed by what should be an interesting conversation between himself and Fed’s Vice Chair Stanley Fischer. If that wasn’t enough we also have the Bank of England’s rate decision on Thursday. The IMF/WB meeting on Friday aside, we note that Chinese PM Li and Germany’s Merkel will lead a joint cabinet meeting for the third time in Berlin to complete an investment partnership accord. Data wise Tuesday’s highlights will be Germany’s and UK’s IP and an update on US consumer credit. Wednesday will see the release of the Fed’s latest meeting minutes and HSBC’s China Services/Composite PMI for September. We will get the usual US weekly jobless claims on Thursday as well as US wholesale inventories and German exports. Friday’s data highlights will be IP data from France and Italy, the US monthly budget statement and UK trade data. Earnings wise we have a total of 9 S&P 500 companies reporting this week with Alcoa’s Q3 on Wednesday (after market) before the banks report next week.