• Japan and China agreed on a currency pact over the weekend. The two nations will promote direct yuan-yen trade, rather than converting their currencies first to dollars. Japan will hold yuan in its foreign exchange reserves. It’s a small but important step that draws China into more market-based influences on its currency. From The Wall Street Journal.
• Italian retailers had the worst Christmas season in 10 years, according to consumer group Codacons. Consumer confidence in the country fell to the lowest level in 16 years. This news hits before austerity measures passed in Parliament kick in. From Bloomberg News.
• Sears Holdings announced it will close over 100 Sears and Kmart stores as the holiday sales fell over 5% versus last year. The company was unable to capitalize on a somewhat resurgent U.S. consumer this Christmas. From Reuters News.
• The Bank of England’s approach to quantitative easing is pushing pension funding deficits higher. The BOE’s buying of gilts with more than 25 year maturities is creating return issues for many pension funds. The hope the long dated gilt purchases by the Bank of England would entice pensions to buy riskier assets in stocks and corporate bonds has not played out. From the Wall Street Journal.