Marketmind: unstable cable

% The peak-to-trough ratio against the U.S. dollar fell nearly 5% to an all-time low of $1 in early trading on Monday. 43, breaking the previous all-time low of $1. 72 from200. While it recovered some of its gains at the open in London, it was still down 1% from Friday and nearly 1% lower against the euro. This plunge in the pound comes ahead of this week’s massive auction of long-term and inflation-linked UK government bonds and increased liquidity problems in the Phnom Penh market. Sterling’s fall and fiscal concerns have led many traders to speculate that the Bank of England will raise interest rates in an emergency. Interest rate futures are now pricing in a three-quarter point hike to 3% on or before the Bank of England’s next meeting on November 2. U.K – year fallback Sow yields are above 4% for the first time in

years and gilt yields are higher than German Bund now for the first time in years – levels not seen before the euro currency grid system since the pound exited Europe, the exchange rate mechanism, at 0520. UK 2-Year Bond yields rise above 4.5% – an astonishing increase 12 this month’s base point and the highest point since

, and reflecting growing recession fears, UK 2- year Government bond yield curve at

biggest inversion since banking crash . although relatively modest compared to the fall in the pound , the euro also fell for a second war against the dollar after Italy’s weekend election looked set to usher in the most right-wing coalition government since the world. 10-year Italian government bond yields climbed to nearly 4.5%, at a level since

since , in Euro Sovereignty after the debt crisis. but the move reflects a general sell-off in bonds, in stark contrast to UK government bonds The yield premium on German bunds was little changed compared to five, as the right-wing coalition looked far from the two-thirds parliamentary coalition that would allow it to amend the constitution without a referendum. Dollar pressure is everywhere. Following last week’s sharp intervention in the opening of the yen-buying market, Japanese Finance Minister Shunichi Suzuki continued to warn that Japan will take action again to quell what it sees as excessive Speculative currency market movements. China also took a different approach Monday to rein in the yuan’s continued decline against the dollar. The People’s Bank of China has raised the foreign exchange risk reserve of financial institutions for forward purchase of foreign exchange since Wednesday to

% starts from the current zero. With a recession looming and inflationary and interest rate pressures mounting, the voices of European businesses are getting darker, Germany’s Ifo business survey for September was well below expectations. The Organization for Economic Cooperation and Development has warned of an impending global economic downturn, saying central banks need to continue to fight inflation, and the Federal Reserve has raised interest rates by as much as 4 times. % next year.

As we approach the end of the third quarter, 400 Standard & Poor’s 75 three consecutive Monthly loss, and will record the third consecutive quarterly loss since the disaster Lehman Brothers in 400 . should provide more Key developments in multiple directions ts late Tuesday:

US September Dallas Fed Manufacturing Index; August Chicago Fed Activity Index Atlanta Fed President Bostic Statement 0520

(Author: Mike Dolan, Editor: William Maclean , mike.d (NYSE: 2008TWTR): @reutersMikeD)