By Greg Peel

The Dow closed up 39 points, or 0.3%, while the S&P gained 0.3% to 1413. With a partial bounce in Apple, the Nasdaq is up 0.5%.

The November US jobs data are out tonight and it's not unusual for Wall Street to post a subdued session the night before. Cliff remains in the spotlight, but nothing particularly new emerged in the rhetoric battle last night, with the sticking point continuing to be the expiry of the Bush tax cuts for the wealthy. However, the prevailing feeling in the market is that a resolution will be achieved either just before or soon after December 31. Otherwise we'd no doubt be a lot lower.

The main newsflow of the night came from Europe.

The eurozone September quarter GDP was revised last night to a 0.1% contraction, following a 0.2% contraction in June. Germany and France both posted individual growth numbers of 0.2%, with the peripheral basket cases providing the offset. The ECB updated its economic forecasts last night, downgrading to weaker expectations. The ECB now expects the zone economy to contract between 0.6% and 0.4% in 2012. Thereafter the figures have also been reduced, but have a bit of a dartboard feel to them. The ECB suggests 2013 GDP will land somewhere between 0.9% contraction and 0.3% growth, with 2014 looking at something between 0.2% growth and 2.2% growth.

The updates coincided with the monthly ECB policy meeting, at which it was decided to keep the cash rate on hold at 0.75%. However, Draghi's press conference comments were downbeat with regard to zone outlook, hence the market believes a rate cut may be on the cards early next year. This belief sent the euro down 0.8% against the greenback, pushing the US dollar index up 0.5% to 80.23.

Draghi reiterated for the umpteenth time that OMT stands ready ? open-ended purchases of distressed sovereign debt ? for any country requesting a bail-out. But the phone has been silent. The threat of OMT is proving self-fulfilling in ensuring lower bond yields for Spain and Italy. But how long can this catch-22 stalemate last?

Since OMT was unveiled, Spain has had little trouble in issuing new debt at auction. However Spain needs to borrow heavily, and demand is beginning to wane. The bond market potentially fired a warning shot last night when the latest Spanish auction was under-subscribed. The benchmark Spanish ten-year yield jumped 19bps to 5.4%. That's still a long way from the default-risk levels over 7% seen earlier this year, but how long will the bond market play this game?

Spain has drawn all the attention, leaving Italy to mostly fly under the radar of late. But fear is growing that Rome may yet beat Madrid to that telephone. Appointed technocrat prime minister Mario Monti has been praised outside Italy for successful austerity, but inside Italy, as is the case all over Europe, the natives are restless. Ousted former prime minister Silvio Berlusconi is mounting a comeback, and Italians are beginning to feel it's better the shamelessly corrupt devil you know. Monti's term is set to end in April.

The Italian ten-year yield last night rose 7bps to 4.4%.

Wall Street meandered its way to the close last night, but in a reverse of Wednesday night, kicked up on the death. A combination of the ECB's eurozone economic downgrade and a stronger US dollar sent commodity prices lower, with base metals down 1-2%. Brent crude fell US$1.78 to US$107.03/bbl, while West Texas lost US$1.56 to US$86.32/bbl. Spot iron ore bucked the trend and rose US50c to US$118.40/t.

The threat of more money printing in Europe saw gold up US$4.60 to US$1698.00/oz despite the stronger greenback, and the safe haven Aussie is also 0.3% stronger at US$1.0483.

The SPI Overnight is up 13 points, or 0.3%.

The Australian trade balance for October will be released today ahead tonight's US jobs numbers. Over the weekend, China will provide its monthly data dump.

Myer ((MYR)) is set to round out the tale of woe that is the retail sector AGM season today.

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