Failed 40-year Gilt auction is the top story. What happens if the budget deficits cannot be financed? UK government expected to have financing needs of 146 billion pounds in 2009 and they cannot find enough buyers for 2.55 billion sterling. The risk of failed British auctions before were with inflation protected bonds and not nominal bonds. It seems like investors are willing to buy short-dated paper when the central bank is willing to be a stopgap but they are not willing to buy out the curve in a long-term environment which is inflationary.

This will cause more focus on US debt auctions as the market is fearful of supply. The US 5-year auction of $34 billion. The Fed bought $7.5 billion of Treasuries. What the fiscal authority issues with one hand the monetary authority buys with the other.

Words matter and if the Treasury secretary suggests that he is "open" to the Chinese idea for an improved SDR world currency you can expect that traders will listen. Of course, he was referring to the need for international liquidity through the IMF, but the market did not take his comments as a nuanced view on global liquidity.

US-

Durable goods were up big. This was a surprise, but the previous month was revised down which dampens some of the positive effect. New home sales were positive which is another positive sign for the economy.

EU -

German IFO numbers were relatively stable, but still at depressed level. While this is not good, the slowing slowdown theme is positive.