U.S. equity futures were flat in early trading Thursday following a letter from Treasury Secretary Geithner to leaders stating that the debt ceiling would be breached on December 31 unless the fiscal cliff were to be avoided and the ceiling raised. Geithner has stated that the Treasury will defer and delay some payments to create approximately $200 billion worth of additional room under the ceiling, but exactly how much time this buys is unknown.

In other news, the Spanish bailout fund, the FROB, has released a report stating that bailed out Bankia Group, and its parent company BFA, has a negative equity of about $14 billion. Shares fell more than 12.5% at the European open on the news.

Newly appointed Japanese Prime Minister Shinzo Abe has announced some of his cabinet members economic advisor Hamada spoke overnight, stating that the BoJ should consider buying more longer-dated JGB's and other longer-dated assets and would even consider buying foreign bonds to boost inflation through currency devaluation.

Barclays (BCS) analysts say that their favorite trade in 2013 is long gold and short yen, with the yen devaluation being front-loaded into the first quarter as the bulk of the adjustment already may have occurred in the latter part of 2012. However, they expect gold to rally in the face of increased central bank liquidity and rising inflation fears.

• S&P 500 futures were flat at 1,413.50.
• The EUR/USD was higher at 1.3265.
• Spanish 10-year government bond yields rose to 5.289%.
• Italian 10-year government bond yields rose to 4.528%.
• Gold fell 0.25% to $1,656.80 per ounce.

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Asian markets
Asian shares were mostly higher overnight once again lead by Japanese stocks as investors piled into inflation-hedged assets in hopes that the BoJ can effectively kick start the domestic economy. The Japanese Nikkei Index rose 0.91% and the Hang Seng Index gained 0.35% while the Shanghai Composite Index fell 0.6%. In addition, the Korean kospi rose 0.26% and Australian shares gained 0.28%.

European markets
European shares were mostly higher save for Spanish shares following the news about its troubled banking sector. The Spanish Ibex Index lost 0.46%, in contrast to Italian shares which gained 0.49%. Meanwhile, the German DAX rose 0.24% and the French CAC rose 0.5% while U.K. shares gained 0.22%.

Commodities
Commodities were mostly weaker in overnight trade of fiscal cliff and debt ceiling fears. WTI crude futures rose 0.12% to $91.09 per barrel and Brent crude futures fell 0.22% to $110.83 per barrel. Copper futures were effectively flat overnight with prices steady at $359.70 per pound in New York. Gold was lower and silver futures fell 0.25% to $29.96 per ounce.

Currencies
Currency markets showed broad dollar weakness overnight as the euro gained and the greenback sold off against nearly every major partner save for the yen. The EUR/USD was much higher at 1.3265 and the dollar gained against the yen to 85.74, briefly touching its highest two years Wednesday. Overall, the Dollar Index fell 0.25% on weakness against the euro, the pound, the Canadian dollar, and the Swiss franc. A notable mover was the EUR/JPY cross, climbing 0.47% to its highest this year.

Premarket movers
Stocks moving in the premarket included:

• Discover Financial (DFS) shares rose 1.7% premarket after Sterne Agee reiterated its "buy" rating on the company.
• Ford (F) shares fell 0.63% premarket as it is being sued for false mileage claims.
• Microsoft (MSFT) shares rose 0.67% following a Reddit post from Mark Cuban highlighting how much better the Nokia (NOK) Windows-powered phones are compared to Apple's (AAPL) iPhone. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
  
• Time Warner Cable (TWX) shares rose 0.42% premarket as the company bid for Cablevision's (CVC) Optimum West unit, which would give it access to four new markets in Montana, Wyoming, Colorado, and Utah.

Earnings
No notable companies are expected to report earnings Thursday.

Economics
On the economics calendar Thursday, jobless claims and new home sales are due out. Overnight, French GDP and Italian debt auctions will headline the data stream out of Europe.

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