Spanish budget leads the bounce

It was another volatile day yesterday with politicians and
budgets leading the direction in the markets  We had UK GDP
revised numbers out of the gates early with the UK showing
resistance to the recession coming in at -0.4% rather then -0.5%
and gave GBP an early rally against Euro and USD.  We also had
mixed figures from the US with GDP getting a downward revision,
1.3% against 1.7%, mainly attributed to the $5.3bln revision in
Farm Inventories from the worse drought  in decades hitting
the nation and durable goods worse then expected, however Jobless
figures continued their steady decline which is a bonus for a
president seeking re-election.

The main market mover yesterday was Spain’s budget announcement
for 2013, which was delayed until after European markets had closed
and was the real pointer for how the struggling economy will
increase revenues next year.  It is seen as more as spending
cuts rather then increasing revenue through tax, with 8.9% being
knocked off of ministerial budgets expected to reduce €40bln off
the deficit.  The French budget is expected to be the harshest
for 30 years out later today with the much anticipated 75% tax rate
expected to be sworn into the budget at a time when GDP is
remaining stagnant on no growth.

Data out today includes Euro CPI YoY and Core Personal
Consumption, US Michigan Consumer Sentiment from the US. Next week
we have central bank meetings and interest rate decisions from
Europe with ISM Manufacturing data and Non-Farm Payroll next week
from the US.