13 January 2012 at 8:13 GMT
After a couple of solid Spanish and Italian bond auctions yesterday Italy will attempt to make it two out of two today as the beleaguered country gets ready to sell EUR 3 billion 2-year bonds plus some 6-year bonds. The Italian 2-year yield has plunged from a peak of 7.664 percent on November 25, 2011 to 4.183 percent - the lowest yield since mid-October of last year. The Eurozone, Canada and the US will all release trade data today before we round off the week with a consumer confidence report from the latter. Also we kick the earnings season off in earnest with JP Morgan Chase at 12:00 GMT (more on that in Peter Garnry's Equity Update in the afternoon).
US Trade Balance to show widening deficit? After adding 0.4 percentage points to third quarter GDP of 1.8 percent (ann.) trade data continued the positive vibes in October as the deficit narrowed to USD 43.5 billion having averaged 45.2 bln. in the third quarter. Consensus looks for the improvements in trade data to come to an end in November, however, as a deficit of 45 bln. is forecasted. This would still be below the average for 3Q and suggest another addition to GDP from foreign trade (before ajusting for price changes).
US consumers' mood continues to improve: The steep decline in the summer months in confidence coincided with the debt ceiling debate in Congress. Since the low of just 55.7 in August - the lowest level since November 2008 - confidence has rebounded in line with other economic data. At year-end confidence had risen to 69.9 and consensus looks for another gain to 71.5 in today's preliminary January report. Despite the sharp decline and subsequent improvement in confidence we are still far from levels normally associated with expansion. The average expansion reading since 1980 is 89.4 while the average recessionary reading is 68.9 confirming that while things have improved in the US the despair on Main Street is still plentiful.
