Italy votes on debt reduction measures; US consumers in recession

Italy stole the headlines from Greece this week as the sovereign debt crsis showed its potential for contagion. And Italy certainly had no problem keeping the limelight all to itself as data releases were scarce and generally uninteresting though the US showed a bit of resilience in the face of adversity yesterday with strong jobless claims and trade data.
The Euro and Asian stocks continued their comebacks in overnight trading as laid out in our early FX Update and we find ourselves without many signposts today suggesting yet another sentiment-driven market session with eyes on Italy and today's vote on debt reduction measures.



Consumers in the US say this is a recession: Though data is sparse we do have the advance report on November consumer confidence courtesy of the University of Michigan. Despite a 5.4 percent increase in (inflation-adjusted) consumer spending since the trough in April 2009 which has pushed spending 1.6 percent above the pre-recession peak, consumers maintain in survey after survey that this still feels like a recession. The University of Michigan Consumer Confidence Sentiment, Conference Board Consumer Confidence, and Bloomberg Consumer Comfort all tell the same tale and slight improvement in the UofM series in October to 60.9 from 59.4, this is still well below typical recession levels. The average reading in recessions has historically been 68.9, 8 points above the October print, while there is still just north of 27 points up to the average expansion reading of 88.3. Consensus looks for another slight improvement to 61.5 in today's November report.