The EU Heads of State meeting starts today in Brussels, but any notion of something radical has been kicked into the long grass over the past week. It's likely that Germany's lead proposal to set up a more permanent crisis resolution mechanism for 2013 and beyond, in which bond-holders take some pain in future 'bailouts', will be moved forward. Beyond that, expectations are set very low.

Whilst the IMF, key members of Germany's SDP opposition and also former UK PM Brown have come out in favour of more radical proposals to stem the contagion, fire-fighting remains the order of the day for the EU. The euro is showing a fair degree of resilience into year end, once again content to accept the status quo.

However, next year is going to be crunch time, during which either the EU embarks on more radical measures, or defaults will be seen: bank, sovereign or both.

*India rates held steady but not for long

*Sterling feeling soggy once again

*Gold departing from global real rates

India interest rate decision. The Reserve Bank of India kept rates on hold at its meeting earlier today, as widely expected. Further rates rises expected next year, not least because real rates (policy rate minus inflation) remain negative in India, the benchmark rates held at 6.25 percent, with the latest WPI data showing most inflation rates in the economy running in double digits.

Sterling sagging. The pound, having performed well last week, continued its not-so-solid run this week. The disappointing labour market numbers were in the background, but probably not the major reason for the softer tone which was more down to order-flow in a liquidity-deprived market. On those labour-market numbers, the unemployment rate increased to 7.9 percent in October, from 7.7 percent on the broader labour force-survey measure, which reversed the declining unemployment rate-run seen since April of this year. Furthermore, the more up-to-date, but less comprehensive, claimant count measure declined, but only marginally so at 1.2k, way short of the 6-mth average of -25k seen back in July. The dilemma for the MPC remains starker than ever, namely horrible price data but less convincing real sector data against the backdrop of an unprecedented level of fiscal tightening.

Gold and real rates. Interesting to look at our measure of global real rates vs. gold. Gold has been fairly tightly tied to the inverse of global real rates - historical - and especially so during this year. Real rates have risen quite substantially in recent weeks, which itself is telling because the concurrent rise in nominal rates reflects the fact that rising expectations have played only a small part in the recent bond market sell-off.