Investor relief that the US fiscal cliff has been averted and optimism that the political compromise will make a small positive contribution to 2013 GDP are, for now at least, making investors forget about longer-term implications for debt sustainability and (temporarily) relax on euro matters. The Italian general election is over seven weeks away and until then the focus will probably remain on US fiscal developments (or FOMC expectations). However, European debt repayments are expected to top EUR40 billion in January and following today's German auction the onslaught of European auctions begins along with the ECB meeting next week (no rate change expected) followed soon after by the Eurogroup finance minister meetings. Plenty of headline-risk worthy dates here...
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Source: Societe Generale