• Demand outstripped supply at Italian and Spanish auctions as yields fell. Spain raised 10 billion euros versus its target of 5 billion. Italy paid less than half last month’s rate on one-year bills. The ECB’s LTRO is supporting the carry trade on like-maturity sovereign debt. From Reuters News.
• Inflation in China fell to 4.1%, the fifth consecutive month of decline. The data supports continued easing by Beijing. It remains to be seen how committed officials there are to aggressive easing. From The Financial Times.
• Royal Bank of Scotland announced it will exit its unprofitable businesses, including cash equities, mergers advisory, corporate broking, and equity capital markets. The bank said it will eliminate a total of 4800 jobs, including 3500 in investment banking. Capital markets in the fourth quarter of 2011 proved too difficult to bear for a number of firms. This week we’ll see the damage at many banks. From Bloomberg News.