Daily Agenda: December Hike Rumors Don’t Deter Bond Buying

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Despite U.S. futures markets now making odds of a Federal Reserve interest-rate hike in December at higher than 50 percent, investor sentiment remains robust. Jefferies data suggests that over the past week investors remained net buyers of global bond funds to the tune of $2.3 billion while both equity funds and money-market funds also saw inflows. This marks the fourth consecutive rise in assets for bond and equity funds, potentially signaling that the the timing of tightening policy measures has been largely priced-in by the markets.

October U.S. employment data exceeds forecasts. The employment report for October released this morning by the Department of Labor revealed a strong rebound for the U.S. job market with rising wages and payroll and a decline in the headline unemployment rate to 5 percent. At 271,000, the increase in nonfarm payrolls was the largest gain year-to-date, suggesting that a December hike by the Federal Reserve is now likely despite concerns over cooling growth in developing markets.

Square to raise hundreds of millions in debut. In a regulatory filing today, Square, the San Francisco–based mobile payments startup, announced it will seek to sell 27 million shares of stock in an initial public offering priced between $11 and $13 per share. Jeff Dorsey currently heads the company in addition to serving as CEO of Twitter.

AstraZeneca to buy out rival. In the latest major merger announcement in the pharmaceutical sector, London–based AstraZeneca announced today that it will acquire ZS Pharma, headquartered in Coppell, Texas, in a cash deal worth $2.7 billion. The transaction represents a premium of more than 40 percent over the closing value of ZS shares yesterday.

Industrial production falls in Germany. One day after disappointing factory-orders data was released, industrial production figures for September announced today by the Germany Ministry of the Economy included a 1.1 percent contraction of the headline activity index. Weak demand from emerging markets including China contributed to the softer output levels. Third-quarter GDP data for the eurozone’s largest economy will be released next week.

Interbank broker merger in works. Today London–based Tullett Prebon and ICAP jointly announced they were in discussions for Tullett to buy ICAP’s voice-brokerage business, a consolidation play that would involve more than 1,400 salespeople and traders focused on fixed-income and derivatives markets. The interbank/interdealer securities-brokerage universe has been dramatically affected by low interest rates and increasing electronic trading in recent years.