We wish we could say the capital markets were focused on something other than the latest developments from the eurozone. Alas, we cannot.

All the lead headlines, it seems, lead back to Europe.  That is understandable given the global economic implications that are entangled in an EU Summit that many hope will restore the market's confidence in the political resolve to stem the eurozone debt crisis.

It is beyond bemusing to think, however, that this summit -- the "make or break" summit upon which all hope supposedly rests and where seminal treaty changes will be proposed -- is scheduled to last exactly one dinner and a day. 

It took eight years to negotiate the Maastricht Treaty, which arguably has gotten us to this point, and now the effort to debate, propose, and agree to new ideas that will lead to a stronger fiscal and monetary union will last all of 24 hours?

We recognize, of course, that reform efforts have been underway since the Greek crisis exploded in the spring of 2010, yet the tension and the market stresses leading up to this particular summit have been palpable and suggest to us that this face-to-face, coming-to-Herman Van Rompuy session should be somewhat more involved from a time standpoint.

But hey, that's just us. 

We realize the strong counterargument is that these leaders have essentially lost the benefit of time, toying with half measures and eleventh-hour solutions since the spring of 2010 that have been subsequently exposed each time as being a day late and more than a few euros short.

On a related note, the European Central Bank, which five months ago was raising interest rates to fight inflation, cut its main refinancing rate today by 25 basis points to 1.00%.  That is the second rate cut by the ECB in the last five weeks.  It was also announced that the rate for the ECB's marginal lending facility will be cut from 2.00% to 1.75% and that the interest rate on its deposit facility will be decreased by 25 basis points to 0.25%. 

That's not at all, though.  At the ECB press conference, President Draghi announced an extension of lending term limits for liquidity operations to 36 months and that asset-backed securities will now be allowed in the collateral agreement.  In light of these provisions, it only made sense that he acknowledged there are substantial downside risks to the economic outlook.

The press conference headlines hit the wires just shortly after the latest weekly initial claims report showed another welcome improvement in claims filings.  Specifically, initial claims for the week ending December 3 declined by 23,000 to 381,000 (Briefing.com consensus 395,000).  That dropped the four-week moving average to 393,250 from 396,250.

Continuing claims for the week ending November 26 dropped by a large 174,000 to 3.583 mln (Briefing.com consensus 3.700 mln), which is the lowest level since September 2008.  That lowered the four-week moving average for that series by 20,500 to 3.667 mln. 

The Department of Labor said there weren't any special factors accounting for the drop in claims, but offered the caveat that seasonal adjustment factors are more difficult to calculate this time of year.

There was a spike in the S&P futures as the ECB and initial claims headlines hit, but those gains have been relinquished following an added headline that the rate decision by the ECB was not unanimous.

Currently, the S&P futures are down seven points and are trading 0.2% below fair value, so the cash market will be expected to start on a slightly lower note.  Where it goes from there will likely revolve around the latest rumor and innuendo regarding EU leaders' one-night stand in Brussels. 

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.