US: The market tone is mixed today as the onslaught of sovereign headlines has expanded from Europe to the broader market.  Moody’s issued commentary on the US, UK, France and Germany that illustrates concerns on the countries’ debt ratings, while reiterating the current AAA status for now.  Following a mutedly optimistic Beige Book yesterday, today will feature weekly jobs data as well as PPI for December.  The weekly data are likely still in their holiday downdraft, but we should see some return to normal trends over the next two weeks.

Europe: The Italian and Spanish bond auction went relatively smoothly compared to yesterday’s closes, but the trend in issuance continues to be wider and wider for the entire periphery.  Headlines from the Eurozone continue to highlight the fundamental problems of fiscal unity and the growth/fiscal responsibility conundrum.  These issues are best illustrated (today) by Sarkozy’s comments that Ireland cannot keep its low corporate tax rate while seeking European aid.  So you have a country that would be engaging in de facto taxation of its citizens (that is what most all of these programs entail) saying that they want Ireland to engage in fiscal responsibility (hiking taxes) to the detriment of growth (Ireland’s economy is highly financial and thus tax hikes could have dire and immediate impacts on their economy).  This is merely a microcosm of the central debt problem worldwide, which is growing in headline volume as the debate continues on potentially expanding the EFSF.  BOE leaves rates unchanged.

Asia: China’s People’s Daily stating that 2010 CPI could be 3.5%, well above the 3.0% target as the National Bureau of Statistics’ Chief Economist Yao Jingyuan states that Chinese inflation is closely linked to US QE.  Japan has third consecutive MoM decline in Machine Orders.

From Knight Capital