China and the Catholic Church both welcomed new leaders and scientists claimed they had found the "God particle", but things were rather more mundane in the financial markets today.

Spreads were tracking bullish stock markets and grinding tighter ahead of the roll next week. Technicals aside, sentiment did get a boost from US economic data. Initial jobless claims for last week dropped 10,000 to 332,000, confounding expectations of a rise to 350,000.

It was the third consecutive week that the figure had declined and the four-week moving average is now at a five-year low. Coming on the back of last week's strong jobs report and robust retail sales data yesterday, there is every indication that the US economy is steadily picking up.

The Markit iTraxx Europe index was already rallying from the open, and the US data merely gave it extra impetus. The index was trading 2bps tighter at 104.5bps, but still within its recent trading range. Banks were among the strongest performers, as is to be expected give their high-beta status.

German car makers were also in focus after Volkswagen released its full-year 2012 results. The headline numbers were pre-released on February 22, so today's release was hardly earth-shattering news. Nonetheless, it was still worth noting that VW's balance sheet remains strong and the firm's conservative guidance for 2013 probably won't detract from its reputation as a solid single- A credit.

Volkswagen's CDS tightened slightly to 69bps, the first time it has dipped below 70bps for over two years. German rivals Daimler and BMW also rallied by a modest amount, and the three names are likely to remain closely correlated.

Looking ahead for the rest of the week, the EU summit that began today is probably the main event, though little of substance is likely to emerge. EU leaders are likely to agree to a slightly more relaxed framework for austerity.

Germany is espousing "growth-friendly fiscal consolidation", which sounds suspiciously familiar to the wildly successful "expansionary austerity" policy. Either way, we can't expect a meaningful shift in direction.

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