*Stocks were generally little changed in Asian trade. The Nikkei and Shanghai were a slight fraction lower, while Australia lost 0.4%, but the Hang Seng rose a fraction. European indexes are lower on the day, but not by too much, with the Dax off by about a half percent and the Footsie down a quarter percent. US stock futures are essentially unchanged.*Moody’s downgraded Ireland’s rating five notches from Aa2 to Baa1 and gave the country a negative outlook from this point. The move fulfills a warning issued by the rating agency late last month. Irish debt spreads are wider by about twenty basis points this morning in the wake of the ratings move.
*Late yesterday afternoon the EU agreed on a draft form for a permanent crisis resolution mechanism for indebted euro area countries which will come into effect from 2013 and will not affect current bond holders, the treaty amendment must be ratified by all 27 member states of the European Union. The permanent fund will replace the temporary EU750 billion emergency loan facility the is currently in place. The text, which will be attached to the euro area treaty will say, “The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.” Meaning that bond holders will be at some degree of risk under this plan.
*The December reading of Germany’s IFO Survey of the Business Climate was up six tenths on the month to 109.9, better than the fractional decline that was expected; a new record high for the twenty year old index.
*The November reading of the Leading Economic Indicators is due out at 9:00am CST, it is expected to be +1.1%.
*The Fed is scheduled to buy Treasuries today that are due to mature between 8/15/28 and 11/15/40; the results of the operation will be announced just after 10:00am CST.
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