Equity markets have quickly reversed higher overnight as expectations rise that a Eurozone rescue package announcement is imminent. Both European and US major indices managed to close higher yesterday, with the DAX +2.9% and Dow Jones +2.5%; in turn the Asian session has enjoyed a strong session, and at present the Nikkei is +2.8%, Hang Seng +3.0% and Shanghai Composite +0.8%. Although public understanding of the anticipated Eurozone plan is light on specific details right now, investors have clearly been appeased by the suggestion that the EFSF might be leveraged and able to capitalise a special purpose vehicle created by the European Investment Bank. The expectation is then that the SPV would be able to issue bonds and use the proceeds to buy European sovereign debt - without the ECB needing to expand its balance sheet. Obviously, until a plan or set of plans are formalized and agreed upon, there remains a significant risk of disappointment.

In yesterday's session, data took a back seat to comments out of Europe, but we did also get some interesting rhetoric from BoE member Broadbent. In line with the tone of the recent minutes, Broadbent struck a clearly dovish tone by declaring that more asset purchases in the current environment would be beneficial for the banking system and UK growth. At the last MPC meeting on 8 Sep, he did not formally vote to increase QE (Adam Posen remained the sole dissenter voting for a 50bn increase in the asset purchase target), but it was made clear yesterday that this was a fairly close decision for him. Referring to the central bank's apparent insensitivity to searing levels of inflation (CPI 4.5% YoY at the last measure), he asserted that keeping CPI on target (2.0% YoY) would have been detrimental to growth. Based on these remarks, it seems probable that Broadbent is one of the MPC members most likely to join Posen in voting for more QE should the economic situation continue to deteriorate.

Looking ahead to today's European session, we have Swedish PPI, Eurozone M3 and the release of the Switzerland's KoF economic forecasts for September. In the afternoon, US consumer confidence and the Richmond Fed manufacturing index are also due.