French unemployment rises.

Unemployment claims of Class A registered job seekers in France rose 0.5% on month in November to 3.29M after surprisingly falling by 0.6% in October. On year, the figure climbed 5.6% in November. The figures provide further evidence that whatever French recovery appeared to be taking place has petered out. However, the government argued that when taking a longer-term view, unemployment growth has started to reverse in Q4.

Over 1M people set to lose unemployment benefits.

An estimated 1.3M people are set to lose extended unemployment benefits when funding for those benefits runs out tomorrow. Since 2008, the federal government has provided money to those who are without a job for longer than 26 weeks and for up to 99 weeks. Concerned about people falling into poverty, Democrats plan to try to reinstate the provisions in the New Year; however, Republicans are opposed, arguing that the extended payments encourage unemployment.

Japan continues escape from deflation.

Japanese November core inflation rose to a five-year high in November, increasing to 1.2% from 0.9% in October and topping consensus of 1.1%. "Core core" CPI, which excludes volatile fresh food and energy prices, accelerated to +0.6% last month from +0.3% in October, with the November gain the biggest in 15 years. Crucially for Japan's fight against deflation, total cash wages rose for the first time in five months with an increase of 0.5% In addition to encouraging CPI figures, other data appears to show that Japan's economy is in decent shape. Industrial production rose 5% on year in November, although that was down from 5.4% a month earlier. Retail sales climbed 4% vs 2.3% and unemployment held steady at 4%, but overall household spending rose just 0.2% vs +0.9% in October and consensus of +1.7%.

Muni bond market set for worst year in almost two decades.

Municipal debt is down 2.58% so far this year, putting the asset class on course for its worst annual performance since 1994. In contrast, muni debt provided a return of 6.78% last year. Detroit's fall into bankruptcy protection, as well as problems in Chicago, Illinois and Puerto Rico, have had a major effect. However, municipal debt tied to real-estate development, which is known as "dirt bonds" and is fairly risky, has risen 1.1% amid the recovery in the housing sector.

Nikkei continues march higher.

Japan's Nikkei 225 has climbed 1% to 16,174 today after finishing above 16,000 yesterday for the first time since December 2007. The yen has weakened and touched a five-year low, and the USD-JPY was +0.4% at ¥104.79 at the time of writing after earlier hitting ¥104.84, the weakest yen level since October 2008. A major factor boosting stocks is the start of tax-free investment accounts, which has sparked buying from retail investors.

Chinese credit squeeze eases following PBOC move.

China's seven-day repurchase rate has dived 3.44 percentage points to 5.4% after the People's Bank of China injected 29B yuan ($4.8B) into the money markets via regular open-market operations. The benchmark rate had skied to 8.84% over the previous five days due to the PBOC refraining from open-market activity since the start of December as part of its attempt to rein in soaring debt. Emergency liquidity injections last week had failed to ease the credit squeeze, which had hit stocks also.

Municipal debt in China doubles in two years.

Local-government loans in China almost doubled to 19.9T yuan ($3.28T) in 2010-2012, a state think tank estimates. Total central and local government debt was almost 28T yuan at the end of 2012, representing 53% of GDP. In an effort to rein in the ballooning debt, China's central bank refrained from injecting liquidity into the money markets earlier this month, which is what has helped cause the latest spike in short-term interest rate.