Risk assets rely on Fed largesse

The reaction to today's belated September jobs report showed just how dependent the market is on Federal Reserve largesse.

Risk assets rallied after the headline figure missed consensus estimates - just 148,000 jobs were created, compared to the 180,000 expected. In normal times this would have probably triggered a selloff, but we are in an unconventional era, and the disappointing jobs numbers only served to boost sentiment.

The likelihood of QE tapering before the end of the year had already diminished due to the government shutdown - after today's jobs report the Fed probably won't act until the first-quarter of 2014 at the earliest. The prospect of more liquidity from the central bank is a welcome one for bullish investors.

The Markit iTraxx Europe tightened 2.5bps to 83.5bps, with French and peripheral credits leading the charge.

One name that did lag behind, though, was Telekom Austria. The firm's CDS widened 15bps to 144bps after it bought half of the 28 frequency blocks in a spectrum auction for €1.03 billion. The price was well above expectations, and the new debt probably required to finance the purchase will damage the company's credit standing.

On the plus side, Telekom Austria is about 28% owned by the government and America Movil owns roughly 23%. The latter -- which is the world's biggest telecoms carrier - recently pulled out of a full takeover of Dutch firm KPN (131bps, 0), which reported its results today.

America Movil clearly still has plans for European expansion and it will be interesting to see how it adapts its strategy after KPN's rejection.

In the US, appliance maker Whirlpool was among the strongest performers after it posted upbeat earnings and raised its full-year forecast. The company's CDS tightened 9bps to 100bps.

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