Last checked at 
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at .
FED PAUSE IN 2023? THE THREE CRUCIAL FACTORS (1028 GMT)
The debate about future rates is focussed squarely on what the Federal Reserve will do next year, as most investors take for granted that the European Central Bank will raise rates by 50 bps at least twice in 2023.
Richard Clarida, global economic advisor at PIMCO, who was vice-Chair of the Fed until earlier this year, highlights three factors that would prevent the U.S. central bank from easing policy.
The first one is a possible easing in financial conditions, triggered by investors' doubts that the Fed would keep the policy rate in restrictive territory.
Then markets should assess the policy rate level required to push real interest rates into restrictive territory.
Clarida says that "the (Fed) committee believes that the long-run neutral real interest rate is around 0.5%, which compares with the current yield on five-year U.S. Treasury Inflation-Protected Securities (TIPS)" of about 1.5%.
He adds that the Fed likely sees this market pricing as an indication that rates are rising enough to start putting downward pressure on inflation.
The third factor is what level of unemployment will be required to ease cost-push pressures in the labour market.
Wage inflation is running above a 5% annualized rate, and underlying productivity is estimated at around 1.25%, implying that wage inflation would eventually need to decelerate by 1 to 2 percentage points for the Fed to be confident that its 2% inflation goal can be reached, according to Clarida.
A RED TIDE RUSHES INTO EUROPE (0839 GMT)
Europe has opened in a flood of red, with tech stocks leading the way lower, thanks to a 1.7% drop in semi-conductor maker ASML, which is highly sensitive to shifts in perception about the state of the underlying global economy. The STOXX tech index is the biggest laggard so far on a sectoral basis, falling 1.7% to its lowest in five weeks, while autos are under pressure, falling 1.6%, following a media report that stated carmakers would continue to suffer chip shortages for at least another year.
No sector has been spared, with just HSBC and copper producers Fresnillo and Antofagasta providing anything in the way of an uplift to the FTSE 100 , which is still down 0.7%, while Germany's DAX is down 1%, thanks to the drag of real estate company Vonovia , which is down 3.6% and Zalando, Europe's biggest online fashion retailer, which is off 1.6%, having got no relief from data that showed a softening in German wholesale inflation in November.
SAYONARA, CHEAP MONEY (0732 GMT)
And so the last dove prepares to fly the coop, and the end of an era of super-cheap liquidity comes into view.
The Bank of Japan has loosened its yield-curve control, the 10-year yield has surged toward its new ceiling and pulled the yen with it. Japanese government bond futures fell fast enough to trip a circuit breaker in Tokyo and the Nikkei lost 2.8%.
Soon-to-be-outgoing Governor Haruhiko Kuroda is due to speak at 0630 GMT to further explain himself. But markets have already taken the move as a step toward Japan extricating itself from yield curve control and near-zero interest rates.
And that would bring down the curtains for the last bastion of super-easy policy in developed markets, leaving investors to ponder a higher-for-longer world.
Asian shares spiked lower, the yen reached a four-month high on the dollar, while the yields on the 10-year Japanese bond hovered at 0.40% - just under their new roof of 0.5%. U.S. Treasury yields also jumped.
Key developments that could influence markets on Tuesday:
Economic events: Germany producer prices for November, U.S. building permits and housing starts
EUORPE HEADS FOR SOFTER OPEN AS OUTLOOK DARKENS (0728 GMT)
Europe looks like it's heading for a weaker start to the day, as Stoxx 50 futures hit their lowest in a month, following on from a weak session the day before as investors grow increasingly uneasy about the economic outlook. Futures on the FTSE are down 0.5%, while those on the DAX are off 0.9%.
The big financial news today has come from Japan, where the central bank has relaxed some of its controls over government bond yields, which dictate the path of long-term interest rates. The yen has surged by 3% in response and Tokyo stocks have shed nearly 3% and slid to their lowest in over two months.
The dollar is on the backfoot, which is giving a small lift to crude oil, but gains there are being reined in by caution over the surge in COVID cases in China - the world's largest consumer of commodities. Copper is down around 1%, which could weigh on the basic resources sector later.
