It was a relatively light week from an economic standpoint, as the highlights were mostly focused on Italian and Greek politics and their role in the ongoing Eurozone situation (see last week’s note regarding drama).  As the pinnacle, we saw a resignation of the heads of state in both nations as part of the negotiation process for austerity and debt reduction measures.  On Friday, Italy’s senate approved a series of these measures, which brought down yields.

The high-profile and closely-watched economics team at Goldman Sachs now believes the Eurozone has entered into recession in Q4, albeit perhaps a shallow one.  The core nations are expected to bounce back next year, while the peripheral countries face a continued rough road for several years, in their estimation, led by difficult by austerity measures.  Whether this is proven true or not, markets already appear to have priced in this outcome.  Read more