US equity markets slipped back overnight on the expectation that the upcoming earnings reporting season will struggle to meet expectations.
Markets also face the prospect of confidence sapping deficit talks as the practical limits of the US debt ceiling are reached. The Dow fell 0.4% while the S&P 500 was down 0.3%. In Europe the FTSE100 was down 0.4% while the Dax fell 0.6%.
US bonds were little changed overnight. Ten year US government bonds yield 1.90% while German long bonds yield 1.52%, a touch higher than the day before. Australian ten year bonds yield 3.43% having risen from 3.00% in early October.
The AUD ended the overnight session on a firmer note moving back into the US$1.05 range. The USD fell against the euro ahead of a European Central Bank meeting on Thursday and as sentiment in Europe picked up (see below).
Commodity prices were mixed. West Texas crude oil edged higher but gold and copper moved a touch lower.
There was no data of note yesterday. Today sees data on trade while new figures on retail spending will be released tomorrow and building approvals on Thursday.
The Eurozone Sentix investor confidence jumped from -16.8 to -7.0 in January, he steepest of the five consecutive gains since September.
Eurozone producer prices slowed from an annual pace of 2.6% to 2.1% in November. This further unwinds the August 2011 spike where the PPI rose sharply from an annual pace of 1.6% to 2.7%.
UK house prices rose 1.3% in December according to the Halifax, for 'growth' over the year of -0.3%.
No data released overnight. The US faces further budget discussions as it seeks to deal the immediate problem of its government debt ceiling and the medium term issue of reforming its tax and spending programmes to place them on a sustainable footing.
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