Eurozone economic data continues pointing to the prevailing recession, although we positively note that the deterioration recorded in most expectations surveys has stopped.
On the negative side we note that industrial production in the Eurozone fell sharper than expected in October, reflecting an annual reduction of 3.6%.
More positively, we note the slight increase recorded in the preliminary manufacturing PMI (Purchasing Managers Index) in Europe to a level of 46.3, compared with 46.2 in November.
We emphasize that although the absolute level of the PMI index is still very low, the index indicates the expected halting of the deterioration of the industrial production.
A sharp increase was recorded in Italy’s government bonds yields last week.
Later on there was a steady risk premium decline, so all together, the 10 years yields increased relatively moderately by 8 basis points during the week.
One of the reasons for the moderation in market concerns are Silvio Berlusconi’s words that if Mario Monty accedes to the request of the moderate bloc to run for prime minister, he would not run against him.
The payment transfer to Greece, as part of the bailout program, was officially approved by European finance ministers.
We note that Greece’s 10 year bond yields continued to decline quiet sharply in the past week.
Data released last week regarding Chinese economy was mixed.
Positively, we note that the HSBC manufacturing PMI rose in December (preliminary estimate) by higher than expected, to its highest level in the past 14 months.
Earlier in the week, the industrial production and retail sales indexes rose by higher than expected as well.
We shall note that as in the U.S., China also published its disappointing trade balance data for November, which indicates a more moderate increase than expected in exports and stability in imports.