The German economy continues to be the rock of the region as it reported a bigger than expected drop in unemployment of 34k vs the estimate of a fall of just 10k. The unemployment rate fell to 6.7% from 6.8%. The news lifted all European stock markets off their early morning lows and helped to offset unexpected declines in German and French retail sales. On the flip side, Italy’s unemployment rate in Dec rose to 8.9%, the highest since at least ’04 when this current survey began. Greece’s PM said he’s hopeful that they can have a debt deal by week’s end. Portugal’s bond yields are falling after the PM, apparently not watching the recent action in his bond market, said their debt is “perfectly sustainable” and that there is no risk of a writedown. A Portuguese bond maturing in Apr ’21 is trading 42-46. In Asia, Malaysia did not follow other central banks as they left rates unchanged as expected. Taiwan’s economy fell into a recession as they reported the 2nd quarter in a row of contraction mostly due to a slowdown in exports.
