By Greg Peel

The Dow rose 46 points or 0.4% while the S&P gained 0.5% to 1314 and the Nasdaq added 0.7%.

Last night Spain looked to auction E4.5bn of ten-year bonds and as is usual now, the world held its breath. After a recent trashing by S&P, anything might happen. But as it was the Spanish auction received such strong demand that E6.5bn of tens were sold at a yield of 5.403%. The previous equivalent auction saw a settlement yield of 6.795%.

Spain also flogged some sevens, and they went for 4.541% compared to a previous 5.11%. Only the fours copped a rise in yield, to 4.021% from the earlier 3.912%.

France thought this was all a bit of a lark, and auctioned some twos at 1.05% when back in those halcyon days of a AAA rating the cost was last 1.50%. In short, pretty much every eurozone bond auction conducted since S&P's mass downgrade has been settled at yields substantially lower than pre-downgrade yields. What's going on? Is it, dare we say, "all over"?

Unfortunately no. What's basically going on might be called the QE you have when you're not having any QE. The new ECB regime has opened the spigots, offering very cheap money to European banks if they lodge eurozone sovereign bonds as collateral. So at each auction the banks are buying the once "toxic" paper and swapping it for cheap money in what effectively constitutes an arbitrage. The previous ECB simply bought sovereign bonds from the stricken PIIGS and copped a lot of criticism for doing so in a way that seemed discriminatory. Under the current system, the ECB can't be accused of anything other than backdoor quantitative easing.

The result? Wall Street is now up almost 20% since the October low.

Realistically this was what the world was calling out for all through late 2011. As Europe threatened to implode, those in the know argued strenuously that the money was there if someone would just bloody well use it. And that's what the ECB is finally doing, in an exercise little different from what the Fed's been doing since early 2009. The only problem is that QEs 1, 2 and 2.5 in the US haven't really achieved much.

Unless you consider that last night's new weekly jobless claims number in the US showed a 50,000 fall to a seasonally adjusted 352,000 ? the lowest level since April 2008. These weekly numbers are extremely volatile, but pre-GFC results? That has to be something to spark interest. And the December CPI was flat, suggesting zero rates and QE recycling from the Fed are not threatening to cause runaway inflation.

The VIX volatility index in the US fell to 19.9 last night in the US. Anything under 20 is what we used to call "complacency" territory. And one need only look at daily movements on Wall Street in 2012 to note that Dow triple-digit days seem to have dried up. Since 2007 there haven't been too many sessions without a triple digit moves, and 300-400 points became almost a yawn. Before 2007 a triple-digit move was greeted with "wow". Could we be normalising? Or will 2012 simply herald in The Great Sideways?

It is assumed that by week's end Greece will have sorted its debt restructuring. Eurozone finance ministers will meet and probably there won't be any headlines of note. There are some significant US earnings reports being released as I write, Google posted a shocker and is down 10%. But results have been well received for the likes of Intel and IBM, and earlier in the session both Bank of America and Morgan Stanley posted sufficiently positive results to keep this rally going. The US earnings season to date, and it's still early, has been "mixed" but so far not too bad given some serious fears.

Base metals kept on keeping on last night, mostly rising another 1-2% except for nickel which clearly comes from another planet. It decided to rally over 3% last night. Oil is stuck in a tight range and going nowhere much as the world waits to see what happens with Iran, while gold slipped back US$7.10 to US$1653.00/oz on the low US inflation data but is also now stuck in a rut.

The euro was a bit stronger again following the aforementioned auctions, the US dollar index is down 0.4% to 80.20 and the Aussie is little moved at US$1.0407 following yesterday's local employment numbers that left everyone scratching their heads.

The SPI Overnight is up 29 points or 0.7%.

It's General Electric night tonight in the US.