Equity Indices

The Dow and S&P 500 eked out a fifth session of record closing highs, barely extending the market's recent rally in light volume as consumer discretionary shares gained.  The S&P 500 has rallied more than 9 percent from a six-month low in October, buoyed by supportive economic data and solid corporate earnings reports. The S&P 500 set its 40th closing high of the year, versus 45 such highs in 2013. The last time the index closed at a record for five consecutive days was in May 2013.

 Interest Rates

 Benchmark Bond Yields

The Treasury on Tuesday accepted Euro 8 million in 28-day Treasury Bills at an average yield of 0.075% and Euro 16.5 million in 91-day Treasury Bills at an average yield of 0.082%.  Outstanding Treasury Bills amount to Eur253,990,000 - a decrease of Euro 5.5 million from the previous week.

The European Central Bank left interest rates unchanged holding them at record lows while it rolls out new stimulus measures it hopes will see off the twin threats of deflation and economic stagnation.  The decision to leave rates at record lows was widely expected after the ECB cut them to rock-bottom levels in September and the bank's president, Mario Draghi, then stated that they had hit "the lower bound".

Italian industrial output dropped a much steeper than expected 0.9 percent in September,  increasing the likelihood of yet another economic contraction in the third quarter.  National statistics institute ISTAT marginally lowered August's data to a rise of 0.2 percent from 0.3 percent, and over the whole of the third quarter output was down 1.1 percent from the previous three months.

The Bank of England, once widely expected to start weaning Britain off near-zero interest rates this month, now looks set to signal no rise in borrowing costs until the middle of next year.  The BoE kept rates at 0.5 at its monthly policy meeting which ended on Thursday.  A combination of weak inflation that could fall below 1 percent soon, still-feeble wage growth and the risk of a return to recession in the euro zone, has already prompted some of the Bank's top officials to say they are not ready to start returning to more normal monetary policy.

Forex

The yen pulled back from a seven-year low against the dollar after comments from a Japanese government official cooled heightened speculation that Prime Minister Shinzo Abe would call a general election in December.  The dollar's losses were limited, however, as comments from the top government spokesman were not enough to douse the speculation after days of intense media coverage.