News Headline Summary

US fiscal cliff update

- Equity futures in Europe opened sharply higher, with DAX futures up around 2.2%, highest level since early 2008. There are no major EU macro releases and the overall direction will likely depend on how market participants in the US react to the developments on fiscal cliff/debt ceiling issues.

Analysis details (08:35)

- United States lawmakers approved a deal preventing huge tax hikes and spending cuts. By a vote of 257 to 167, the Republican controlled House of representatives approved a bill that fulfills President Barack Obama's re-election promise to raise taxes on top earners.
- The senate passed the measure earlier on New Year's day and Obama said he will sign it into law shortly. Spending cuts have been postponed for two months with a series of negotiations beginning between the White House and US Congress on America's debt ceiling.

Debt ceiling issues:
- However the bipartisan fiscal cliff deal did not address the debt ceiling issue. Treasury Geithner had submitted a letter to Congress saying he had begun a "debt issuance suspension period" that would last through Feb. 28. That means Treasury will employ a series of "extraordinary measures" so it does not exceed the debt limit.
- In terms of comments from the major rating agencies. Late last year, Moody's said it would likely take any rating action sometime in 2013, but could act earlier in the year if there is brinkmanship surrounding the debt limit, and if a failure to resolve the current budget negotiations triggers economic instability.

02 Jan 2013 - 08:33 - Equities Bank Speaker - Source: RANsquawk

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