SCOREBOARD: No Greek holiday

Stocks were belted across the globe overnight, the major indices in Europe down between 1.1 per cent and 1.8 per cent. Weaker metals (the LME metals index down 3.6 per cent) weighed although other commodity prices were mixed – oil up 0.3 per cent on Nymex ($US73.9) while gold was down smalls ($1087).

Sentiment also dived following newswires reports that S&P no longer regards UK banks as being among the most stable and low risk. S&P points out, however, that these comments were from an old report and that newswires were just regurgitating old news – editors playing short I guess. Added to that, ongoing concerns over a Greek default aren't helping. The Greek 10-year yield jumped to 7.15 per cent overnight from 6.74 per cent and 6.2 per cent at the beginning of the week (10-year bunds are at 3.2 per cent). This is despite officials in France, Greece and Germany denying rumours that financial aid is being sought. Indeed the prevailing view is that there is no risk of Greece defaulting or leaving the euro zone – the Greeks have a lower unemployment rate than some other European nations (or even the US) and at 13 per cent of GDP, the Greek budget deficit isn't exactly unusual – take a look around. Certainly George Soros is a believer that the necessary measures to rein in the budget deficit will be successful.

US markets were having none of it and dived alongside European stocks. Again there was more cause for joy on the macro front if anything – jobless claims fell, although not by as much as expected (470k from 478k with 450k expected) and durable goods orders surged (ex transport and defence up 1.1 per cent). Nevertheless as I write, the S&P500 is down 0.9 per cent (1087) with technology, basic materials and industrials weighing most heavy (the tech sector spooked by lower sales outlook and second quarter profit forecast from Qualcom). It wasn't all bad news though, apparently Ford has returned to profit (first time since 2005), reporting a full-year net profit of $2.7 billion. The Dow is off 81pts (10155) with the Nasdaq (2188) and SPI (4579) off 1.5 per cent.

US treasuries rallied as safe heaven flows picked up and the Treasury's latest auction received good demand. The $32 billion 7-year auction saw cover at 2.85 from 2.72 in December and the 2009 average of 2.57. Indirect bidders were awarded 51.5 per cent of the auction which is a little above the average for 2009. The curve bull-steepened as the yield on the 2-year fell 7bps to 0.87 per cent and the 10-year yield was down 2bps (3.66 per cent). The 5-year yield was off 6bps to 2.41 per cent. Aussie futures traded within a 10/5tick range with the 3s up 6 ticks to 95.05 and the 10s up 3 ticks to 94.50.

In FX land US dollar was bid up, Greek concerns obviously weighing on the euro (down 36 pips to 1.3981) while the Aussie is getting hit by general pessimism over the global growth outlook (down 64 pips to 0.8954). Sterling was otherwise off 61 pips to 1.6134 with the yen at ¥89.88 from ¥90.31.

Data elswhere was light. We saw European economic confidence rise again in January, while the German unemployment rate rose to 8.2 per cent from 8.1 per cent (expected).

In Australia today we get the RBA's credit measure at 11.30am . Most people are looking for a modest pick-up here. Prior to that we've got the NZ trade deficit at 0845 and then RBNZ governor Bollard speaks at 10am (AEST). Tonight, just watch out for US GDP (expected to be rise to 4.5 per cent in the fourth quarter from 2.5 per cent in the third). We should also get the Bernanke vote sometime this morning.

Adam Carr is senior economist at ICAP Australia. See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.