By Greg Peel

The Dow closed up 5 points while the S&P added 0.2% to 1808 and the Nasdaq rose 0.3%.

It was an ugly day on Bridge Street yesterday. There's no other way to put it when Wall Street's up 1.3% and we fall 0.8%. A large portfolio is being sold into the market with financial stocks a primary component and it is not yet clear whether the selling is over. We have seen other such instances of down-days which seem out of place this year, as a result of portfolio selling, only to see a swift rebound thereafter. But at this late stage of the year, does Bridge Street have a rebound left in it?

China's inflation data were no reason for concern yesterday. The Chinese CPI rose 3.0% year on year in November, down from 3.2% in October. The rate of inflation in the 11 months to November was 2.6%, well below Beijing's 3.5% full-year target. While Beijing may have other issues to consider with regard to monetary policy, in particular property prices, inflation is not about to force any tightening on its own.

It was noted at the open on Bridge Street yesterday that taper-talk from the Fedheads may be a trigger for local weakness in the face of the strong US jobs report and positive Wall Street reaction. The St Louis Fed president suggested there may be a small taper in December while the Richmond Fed president said the issue will be on the table for the FOMC. But if ever there was a trigger for tapering to begin now rather than sometime early next year, it was Friday's jobs report alone. Do we really need a couple of Fedheads to point out December tapering is thus a "possibility"? I don't think so. Friday night's and last night's performances are a relatively clear indication Wall Street is now ready and willing.

And quite possibly eager. We've been talking about tapering since May. Back then, the US ten-year bond yield shot up rapidly and largely forced Ben Bernanke to postpone what might have been the first tapering in September. Since September the yield has stabilised in the 2.7-2.9% range. It is not the level that's important to the Fed, it's the stability. The central bank has been at pains to point out an actual interest rate rise is still a long way off. Half of Wall Street is anti-stimulus anyway, and the other half are just sick of the relentless speculation. Let's just get it over with and move on.

Please.

The US dollar index is not yet showing signs of imminent tapering, but that's because of offsetting weakness in both the euro and the yen. Europe is readying itself for a fresh burst of monetary stimulus from the ECB while in Japan, yesterday saw the September quarter GDP result revised down to 1.1% from 1.9% growth. The dollar index fell 0.1% last night to 80.14.

Nor are we seeing the move down we'd like in the Aussie. It's steady at US$0.9109. Gold continues to be a mystery nevertheless. With December tapering a real possibility, gold rallied US$10.50 to US$1239.70/oz last night. Sell the rumour, buy the fact?

Base metals had their first chance to respond to the strong US jobs report in London last night and found some strength, with 0.5-1% moves higher across the board. Spot iron ore rose US20c to US$139.40/t.

The move in base metals contradicted data closer to home, with markets stunned by an unexpected 1.2% fall in German industrial production in October. If the LME wasn't fazed the ICE certainly was, with Brent crude plunging US$2.42 to US$109.19/bbl while West Texas merely drifted down US17c to US$97.48/bbl.

The SPI Overnight fell 2 points.

Only the brave would try to predict what Bridge Street might do today. There is something in the back of my mind though...um...oh yes, Recall ((REC)). The Brambles ((BXB)) spin-off lists today. Billabong ((BBG)) holds its AGM.

We also have housing finance data due locally along with the NAB business confidence survey, and a monthly data dump from China.