One Minute Macro Update

US:  The general market tone is more positive this AM as winter weather impacts the Northeast.  Yesterday's NFIB Small Business Optimism and other economic data did not paint a commensurately rosy picture alongside the recent ISM prints.   Today's big releases will be the Fed's Beige Book, which should provide a more granular level of data points on expansion, and the US Monthly Budget Statement.

Europe:  The Eurozone has the more immediate headline issues, and will continue to set the tone for global markets for the near future.  Rumors about a Portuguese rescue fund have now morphed into reports that the EU/EFSM/EFSF are crafting a package, reportedly worth €100B (Publico).  Portugal sold €650MM 4Y bonds with an average yield of 5.396% (+135.5bp from prior), b/c 2.6x (v 2.8x prior) as well as €599MM in 4.8% 10Y with an average yield of 6.719% (-87bp from prior), b/c 3.2x (v 2.1x prior).  The mixed to favorable auctions for Portugal might have featured ECB influence, but the broad sovereign markets have calmed a bit from yesterday following the auction.  Clouding the picture, however, are the various comments from policy makers, with Merkel stating that the EFSF is "far from exhausted" today after speculation yesterday that the facility would be increased soon.  We expect further turmoil on the political and financing fronts.

Asia:  China Securities Journal speculating that the PBOC may raise the required reserve ratio 3-5x this year.  AUD RBA's McKibbin stating that GDP hit from floods could be 1%.

From Brian Yelvington of Knight Capital


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