Inflation pressures subsiding

Economics

This week we expect US producer price inflation for November to slow after a strong rise in October. The University of Michigan consumer confidence index should continue to recover in December.

Inflation figures for Germany and France are likely to show that headline price pressures subsided in November. The ZEW German business confidence will probably rise in December. In Japan we expect consumer confidence to slow in November.

Foreign exchange

Euro/Dollar: Resistance at 1.3350/1.3450 in combination with overbought weekly indicators that are at the point of turning bearish.

Dollar/Yen: Daily indicators turned bullish again from oversold levels, put the odds in favour of a further upward correction with 104.40 resp 105.30 as next upside objectives.

Fixed income

US and European yield flattened again after the disappointing employment report. The renewed strength of the euro was again a key topic in the markets.

We expect some stabilization of bond yields around current levels with more upward potential for US yields. Endesa had its long-term credit rating raised by one notch by Moody's.

Telecom Italia is planning to buy the remaining 44% of the wireless unit Telecom Italia Mobile.

Equities

We experienced another up-and-down week, with sentiment and liquidity finally pushing markets higher.

Oil prices came down dramatically, we saw a lot of positive economic indicators (except from the labour front) and a lot of liquidity flowed into the market as the last month of the year took off.

This week we will be looking at corporate earnings from financials like Credit Suisse, Manulife Financial and HSBC.