Trade the News Market Internals update at 12:00ET

***Economic data***

– (UK) Bank of England (BOE) leave both Interest Rates and Asset Purchase Target unchanged at 0.50% and £275B respectively
– (EU) ECB cuts the Main 7-day Refi Rate by 25bps to 1.00%; as expected
– (CA) Canada Nov Housing Starts: 181.7K v 200.0Ke
– (CA) Canada Oct New Housing Price Index M/M: 0.2% v 0.2%e v 0.2% prior; Y/Y: 2.5% v 2.5%e
– (US) Initial Jobless Claims: 381K v 395Ke; Continuing Claims: 3.583M v 3.70Me
– (MX) Mexico Nov Consumer Prices M/M: 1.1% v 1.1%e; Y/Y: 3.5% v 3.5%e; CPI Core M/M: 0.3% v 0.3%e
– (US) Oct Wholesale Inventories: 1.6% v 0.3%e
– Natural Gas Inventories: -20 bcf vs. -10 bcf to -15 bcf expected range

– The ECB took center stage in the New York premarket, and though the central bank did cut rates and announce new emergency liquidity measures including eased collateral requirements, investors used the news and more specifically the accompanying press conference as an excuse to offload risk heading into the European leaders summit. Draghi said little to indicate a shifting in the ECB’s stance on purchasing sovereign debt, or suggest the idea that ultimately the institution could be forced to serve as a lender of last resort. Equity and commodity markets were holding near unchanged or slightly higher while Bund and US Treasury prices were lower along with the Dollar heading into the ECB press conference. Trends have reversed course since and intensified. The US 10-year yield has fallen back below 2% for the first time this month while the major indices on both sides of the pond are making fresh session lows. Dr. copper has slid 2% back below $3.50, Jan WTI is under $100 again at $98.25, Gold is off more than $35 near $1700 and the Greenback has firmed pushing the Dollar index back to 79. Peripheral spreads in Europe have blown out sending the Italian 10-year yield back above 6.4%, up 45 basis points on the day.

– IBM announced it has made an offer for DemandTec valued at less than half a billion dollars. The acquisition is expected to extend IBM’s Smarter Commerce initiative by adding cloud-based price, promotion and other merchandising and marketing analytics to help companies better define the best price points and product mix based on customer buying trends. – McDonalds’s reported supersized November SSS sales results that easily topped analyst expectations. The numbers were strong across all geographies pushing shares up to fresh lifetime highs yet again.- The price action picked up during the NY morning as the European central banks rendered rate decisions. The ECB did cut its main refi rate by another 25bps (as expected). The ECB press conference began with the EUR/USD pair moving higher to test 1.3459 after the ECB said it would implement three-year refi operation and ease collateral rules. However, the ECB again only focused on ways to assist the region’s banking sector and reiterated its viewpoint that it would not be a lender of last resort to governments. The EUR/USD tested 1.3310 after Draghi’s commented that the EU treaty did not permit monetary financing of governments. The ECB again indicated that they were waiting on the EU Leaders to set out a concrete game plan at its pivotal Summit that begins later today.

– The BOE left is key rate and maintained its asset purchase target unchanged at 0.50% and £275B respectively (as expected)- Japan Econ Min Furukawa commented that the European crisis was behind JPY currency strength and sought to make utmost effort with BOJ on JPY currency and wanted an international understanding of its FX stance. The JPY was firmer on risk aversion flows against the major pairs ahead of the EU Leader Summit.

**Looking Ahead***

– 11:00 (US) Fed to Purchase $4.25-5.00B in Notes
– 12:00 ECB’s Draghi, EU Pres Van Rompuy and leaders Merkel and Sarkozy to meet in Brussels
– 13:30 (EU) EU-27 Leaders hold First Summit Session in Brussels
– 12:00 (US) Q3 Flow of Funds
– 13:30 (EU) EU-27 Leaders hold First Summit Session in Brussels
– 14:00 (US) Treasury to sell $8.00-8.75B in Notes
– 16:00 (KS) South Korea Nov Producer Price Index Y/Y: No est v 5.6% prior
– 21:00 (CH) China Nov Consumer Price Index Y/Y: 4.5%e v 5.5% prior; Producer Price Index Y/Y: 3.2%e v 5.0% prior