G3 Recap 12-17-10

Main Items:

  • Moody’s downgrades Ireland 5 notches from Aa2 to Baa1. Moody’s also cut the ratings of Bank of Ireland and Allied Irish Banks by 5 notches
  • Congress passes $858 billion bill extending Bush-era tax cuts for 2 years. The House vote was 277-148. The bill is expected to be signed by Obama today.
  • The Fed will be buying 13-17bn on Monday and 7-9bn on Tuesday +1-2bn TIPS on Tuesday. This is basically a week’s worth of buying on 2 days of a holiday shorted week.

Overseas:

  • German IFO Index of Business Climate improved to 109.9 in Dec vs 109 expected and 109.3 previously.
  • French Business Confidence Indicator improved to 103 in Dec vs 102 expected and 100 previously

Commentary:

  • The weekly bearish reversal on treasury yields are suggesting a reversal:

    Also interesting is that despite the sharp drop in yields today, USDJPY actually closed higher on the day.

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