What we got out of the G20 meeting over the weekend was very little as expected. The Germans don’t want to expand the size of the ESM (by possibly combining it with the remaining EFSF) and the IMF won’t get more help from its non Euro members to help Europe until the Germans do. Front running LTRO2 on Wed, the Italian 2 yr yield is falling to the lowest level since April and Spain’s 2 yr yield is down to just shy of the lowest since Nov ’10. The consensus for the amount of bank borrowing from the ECB is about 470b euros vs 489b taken in Dec. The other noteworthy central bank event of the week is Bernanke’s semi annual testimony on the economy and monetary policy in front of Congress on Wed and Thurs. While most Asian markets were lower overnight, the Shanghai index rose for a 7th straight day to the highest since mid Nov, continuing to ride the optimism from last weekend’s reserve requirement cut.

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