Trade the News Market Internals Update at 12:00ET

Dow +301 S&P +36 NASDAQ +85

 

  – Reports that France and Germany are working on yet another plan to bolster the euro zone is driving European and US equity markets higher off what many are viewing as at least temporarily oversold levels. After losing 4.7% last week, the S&P500 is up 3% in the early going. The new plans are anchored in plans for deeper economic integration and more central authority over national budgets, with official proposals to be released ahead of the key December 9th leaders’ summit. Note that unconfirmed reports that the plan included a plan for AAA-rated euro zone members to launch common bonds were later denied. Also aiding sentiment is comments by leading German government advisor Bofinger, one of the so-called wisemen, who admitted in a weekend interview that the ECB needs to act as the euro zone’s lender of last resort. 

 

In addition, the long-running political stalemate in Belgium may have begun to be resolved, following S&P’s sovereign downgrade of the nation. Shares of the largest US banks are leading the rally, with Morgan Stanley up 8%, Citi up 7% and Goldman, JPMorgan and BoA up 5%. Shares of French banks are popping more than 10% in some cases. In the US, there has been much positive press about the record black Friday sales, although some analysts have pointed out that retailers drove volume thanks to steep, and expensive, discounting. Spot gold has popped back above the $1,700 level, up around $30 on the session, while WTI crude is at its highest level in a week, trading above $98. Treasury prices are under pressure and the curve has steepened.

 

The 10-year yield in the US is back above 2% while in Germany it remains near 2.3%.- The greenback took losses this morning on the rising tide of risk appetite, aided by the start of the holiday shopping season and optimism about Europe’s latest plan of salvation. Month-end related USD-selling was noted as well. USD/JPY continued its drift towards the 78 handle as markets suspect the BoJ might take advantage of thin liqueidity conditions and perform anoth round of solo FX intervention. Sterling was off its best levels in the session as BoE’s King commented in his annual report on inflation to the UK Parliament that the euro zone crisis was now threatening the UK economic recovery. King and other members of the MPC stated that UK would likely see flat growth over next six months. The BOE reiterated that inflation would dropped markedly in early 2012

 

– (EU) EU President Van Rompuy and EU’s Barroso meet US President Obama in Washington DC

– 11:00 (US) NY Fed to release Q3 report on household debt

– 11:00 (US) Fed to purchase $4.25-5.00B in Notes/Bonds

– 11:30 (US) Treasury to sell 3-Month and 6-month Bills 

– 12:00 (FR) France Oct Net Change Jobseekers: +13.0Ke v +26K prior; Total Jobseekers: 2.797Me v 2.781M prior