• The Italian Treasury sold 2.5B euros of both 3-year and 10-year paper at 5.62% and 6.98%, respectively. The yields at auction declined sharply from last month’s effort. Overall demand was disappointing, however. Market participants assumed demand for the 3-year bond would be much stronger given the LTRO auctions last week carrying a similar maturity at a much lower interest rate. The hopes for inducing government bond purchases in the euro zone through ECB lending remains to be seen. From The Financial Times.
• There were reports that the ECB was in buy small quantities of Italian bonds after today’s auctions. From Reuters News.
• Hedge funds in the U.S. are betting that early 2012 will be the bottom in housing. Shares of home builders are up almost 30% since the end of Q3, as existing home sales show some life and inventory of existing homes for sale are down to levels not seen since May of 2005. From the Wall Street Journal.
• The U.S. Fifth Fleet declared yesterday that any attempt to disrupt navigation in the Strait of Hormuz will not be tolerated. The war of words heat up in the region as oil prices remain volatile. From Reuters News.