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Morning Update

Risk assets were up across the board yesterday following Draghi’s announcement that the ECB would initiate an unlimited bond buying program. US equities were up 2%, Spanish 10-yr bond yields fell below 6%, and the Shanghai Composite jumped 4%. Industrial production also unexpected increased in Germany and the UK, helping to fuel the rally. The EUR/USD currency pair is currently up over 1%.

Following Draghi’s speech the ball is now in Spain’s court. The new question is what will the terms of a Spanish bailout be? Terms have yet to be made public but they are likely being debated already. Spain has already pushed through their own austerity measures and will likely try to convince Germany that these are all that is needed.

In the US the non-farm payrolls report showed a gain of 96,000 jobs, missing expectations of a gain of 125,000. The unemployment rate ticked down to 8.1%, mostly due to a shrinking labor force. The July NFP numbers were revised down 22,000 to 141,000. The news caused a kneejerk reaction to the downside in the S&P 500 futures but stocks have since recovered and gold is up over 1%. This suggests the market is looking at this moderate miss as another reason the Fed will enact new easing measures sooner rather than later.

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