credit update 08 10 07

Asian stock bourses ended mixed last Friday with the Nikkei down 0.16%, Hang Seng up 3.18%, All Ords up 0.57 and Straits Times up 1.03%

The iTraxx Asia ex Japan widened 3.51bps while the other Asian credit benchmarks chalked moderate tightening.

US stocks rallied Friday led by financials sending the S&P 500 up 0.96% and Dow Jones Industrial up 0.66% after the US Labor department reported an increase of 110,000 jobs in September and revised the August loss of 4,000 to an increase of 89,000 jobs. The robust jobs market data whetted investors' belief that the US economy remains resilient despite the credit market turbulence.

The Financial Times reports that JP Morgan is likely to unveil mark-to-market losses on leverage loans of about $1.4bn and a further $700m of writedowns on mortgages and mortgage-backed securities for a total of $2.1bn, while Bank of America is estimated to be hit with losses from leveraged loans of $700m and mortgage writedowns of $300m. Thus far, the casualties are as follow: Merrill Lynch, $5 bn, UBS $3.7bn, Deutsche Bank $3.1 bn and Citigroup $2.7bn.

Former Fed chief Alan Greenspan said US economic growth is slowing but the odds of a recession is less than 50%.