Trade the News Market Internals update at 12:00ET

***Economic data***

-(CL) Chile Oct Unemployment Rate: 7.2% v 7.4%e
– (US) MBA Mortgage Applications w/e Nov 25th: -11.7% v -1.2% prior
– (SA) South Africa Oct Budget Balance
-(ZAR): -9.9B v -17.0B prior; Trade Balance: -9.6B v -2.0Be
– (US) Nov Challenger Job Cuts Y/Y: -12.8% v 12.6% prior
– (PD) Poland Nov NBP Inflation Expectations: 4.2% v 4.2% prior
– (US) Nov ADP Employment Change: 206K v 130Ke
– (CA) Canada Oct Industrial Product Price M/M: -0.1 v +0.3%e; Raw Materials Price Index M/M: -1.2% v 1.0%e
– (CA) Canada Gross Domestic Product M/M: 0.2% v 0.3%e; Y/Y: 3.02.7%e; Q3 Quarterly GDP Annualized: 3.5% v 3.0%e

– Global equity markets are surging this morning in the wake of coordinated action by leading central banks, along with other positive developments. In an echo of moves made during the crisis of 2008, the Fed, ECB, Swiss National Bank, the BoE, BoJ and the Bank of Canada are reducing the cost of dollar swap lines to 50 bps/OIS, in hopes of boosting liquidity in the European financial system in particular along with extending it into 2013. The risk-on environment this morning indicates that markets see the move as aiding confidence, however there are many who question the efficacy of the move. In an op-ed piece, PIMCO’s El-Erian warned that the fear is that central banks are acting because they feel that they need to once again pre-empt yet another set of potential disappointments. Note that the coordinated move comes after markets reacted with skepticism to the EU’s formal proposals for the EFSF, including lower leverage and an opaque scheme for insuring bond issues. Berlin and Paris aim to outline proposals for closer fiscal integration before the critical EU summit on Dec. 9 that is increasingly seen by investors as a last chance to avert a breakdown of the euro zone.

In other news, China’s PBoC cut its Reserve Requirement Ratio (RRR) by 50bps, highlighting earlier rumors that its upcoming PMI data would remain in sub-50 territory. In the US, the ADP report was very strong, raising hope for a solidly positive November payrolls report on Friday. The November Chicago PMI report beat expectations and hit its highest level since April, and the key new orders subcomponent surged to its highest level since March. Note also that there was an unexpected surge in Oct pending home sales, on a m/m basis. Metals prices have jumped higher on sharpened risk appetite, with gold, silver and base metals up sharply. WTI crude is around $101.50. Treasury prices are under pressure with the US long bond down 2.5 points. The US benchmark 10-year yield is climbing back towards 2.1%, the highest level in nearly two weeks.

– Yesterday after the close, Standard & Poor’s cut ratings on 15 big banks, including all the leading US players and several overseas firms. S&P said that the move was due to a revision of its internal models, not any change in the condition of the banks. Nevertheless, analysts expect the move to impact bank funding costs. Note that shares of the leading US banks are up sharply hand-in-hand with markets, with Morgan Stanley leading the field up 6%. US equities are broadly higher across the board, with few exceptions. RAH is down 3% after missing consensus targets in its Q4 report. – With central banks pulling out all the stops, risk appetite is having its usual effect on FX markets. The greenback is seeing broad weakness versus major pairs as a result of the central bank action. EUR/USD surged immediately following the announcement, to test above 1.3530, while USD/JPY is probing 77.30.

***Looking Ahead***

– (BR) Brazil Central Bank (COPOM) Interest Rate Decision: Expected to cut the SELIC Target Rate by 50bps to 11.00%
– 11:00 (CO) Colombia Oct Urban Unemployment Rate: 9.9%e v 10.2% prior
– 11:00 (US) Fed to buy $8.00-8.75B in Notes
– 14:00 (US) Fed’s Beige Book – 14:00 (US) IMF’s Lagarde
– 14:00 (AR) Argentina Oct Construction Activity M/M: No est v 4.0% prior; Y/Y: No est v 11.1% prior- 15:30 (MX) Mexico Oct YTD Budget Balance (MXN): No est v -179.0B prior