• US CPI rises 0.3%, core up 0.1% in September
  • US housing starts jump 15 on multi-family construction
  • Belgian consumer confidence rises first time in 5 months in October to -7 from -9
  • Sarkozy travels to Frankfurt to meet with Merkel, Trichet, Draghi, Lagarde, Van Rompuy and Barroso
  • US consulting firm says EFSF leverage will be closer to EUR 1 trln than 2 trln; ECB will cut 50 bp by year-end, Euro treaty to be amended to allow for non-compliant countries to leave euro area
  • Moody’s analyst: No way for Greece not to default
  • France, Germany at odds over banking license for EFSF; France wants license (and ECB backing), Germany does not
  • ECB buys Italian debt for second day this week
  • Merkel downplays expectations for major breakthrough at EU summit
  • Schaeuble still wants to give banks nine months to raise capital
  • Fed Beige Book: Spending rose in most regions but hiring remains weak
  • Greek austerity measure passes test vote; final vote Thursday
  • WSJ: Idea of EFSF accepting first-losses on new bonds violates “no-bailout” clause
  • Finnish PM: No breakthroughs expected at EU summit
  • FT: EU bank recapitalization plan could come in below EUR 100 bln
  • S&P 500 falls 1.25% to 1210
  • US 10-year note yield falls 1 bp to 2.16%
  • WTI falls $2.25 to $86.08; Gold falls $15 to $1665

The market began the day geared up for EUR $2 trln in buying power from the EFSF and ended the day disheartened on talk that leverage will bring buying power up closer to EUR 1 trln than 2. Also weighing was talk that the bank recapitalization plan will require less than EUR 100 bln in new funds to be raised, well below the EUR 200 bln the market has been hoping for.

EUR/USD falls back to 1.3730 before stabilizing after touching 1.3870 early in US trade. Stocks, commodities (and currencies closely correlated with commodities like AUD and CAD) all lost ground throughout the afternoon hours.

GBP bucks the trend, trading relatively strongly for reasons only those with higher cerebral horsepower than I can discern. Cable ends at 1.5770 from 1.5849 highs.