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[Bloomberg Markets]( [Forward Guidance]( [FOLLOW US [Facebook Share]]([Twitter Share]( [SEND TO A FRIEND [Share with a friend]]( Biggest holder of U.S. debt is selling, the EU revises growth and inflation predictions, and Janet Yellen is in Washington this week. U.S. debt Japan, the largest holder of Treasuries, [cut back on the debt]( by the most in almost four years in December, according to data from the Ministry of Finance. This attenuates a [global trend]( in Treasury ownership, as investors seem increasingly wary of stepping into the $13.9 trillion market amid uncertainty over the new administration's policies and the prospect of higher U.S. interest rates. The benchmark 10-year was yielding 2.431 percent at 5:20 a.m. ET. EU forecasts The European Commission reduced its [forecast for euro-area growth]( to 1.6 percent and raised its inflation prediction to 1.7 percent for 2017. The Brussels-based commission said that the euro area's economic recovery is "assailed by risks," citing uncertainty over the [U.K.'s route to leaving the union](, and a lack of policy clarity from the new U.S. administration. The report also said the hit to the U.K. economy from Brexit in 2017 will be [lower than previously expected](. Commodity rally Copper has been on a tear lately thanks to [supply disruptions]( at the world's largest mine caused by a strike, plus [strong demand from China](. Rio Tinto Group said that iron ore prices, which have surged to the [highest level since August 2014](, are not going to fall off a cliff. In soft commodities, sugar traders are bracing for a [wild ride](, with global stockpiles set to fall to their lowest levels since 2011-12, meaning the outlook for prices is almost completely dependent on the weather in the coming year. In the shorter-term, there is good news for [Valentine's Day]( as chocolates should be cheaper on the back of a boom in cocoa supplies. Markets rally Overnight, the MSCI Asia Pacific Index [rose 0.4 percent](, while Japan's Topix Index added 0.5 percent in the aftermath of [Prime Minister Abe]('s meeting with President Trump. In Europe, the Stoxx 600 Index was 0.4 percent higher as of 5:49 a.m. ET in a [broad-based rally](. U.S. stock futures pointed to a [gain at the open](. Yellen testimony Federal Reserve Chair Janet Yellen is not expected to give any clear hints as to the timing of the next rate hike in her semi-annual [testimony to lawmakers]( in Washington this week. That will leave investors looking for clues in Wednesday's [inflation data](, which is expected to show a headline CPI number of 2.4 percent for January, a figure which would likely increase calls for tightening from the central bank. Here's what you should read today Odd Lots Podcast: Why it's really hard to create [a new currency in a revolution](. At least 188,000 were [ordered to evacuate]( near a California dam. These countries will be Trump's next [trade-war targets](. Fed's Fischer defends [post-crisis banking reforms]( Trump wants to undo. Forget about the Bank of England [cutting rates]( any time soon. Swiss must draw a new plan for corporate tax after voters [reject referendum](. The next big [blue-collar job]( is coding. And finally, here’s what Joe’s interested in this morning Between now and May 7, the French election is going to loom very large for markets. Everyone's wondering whether Marine Le Pen can win. Given her ideology and her plans to take France out of the euro area and redonominate its debt into francs, the stakes are high. So two things on France: First, get ready to see the attached chart a lot over the next couple of months. It shows the spread between yields on French 10-year government bonds and German 10-year bonds (a measure of France's perceived credit risk), alongside Le Pen's odds of winning in the betting market. As Le Pen rises and falls, expect the French-German spread to do the same. Secondly, the polls show her having virtually no chance of winning. In the final matchup, she's consistently down by over 20 percent, far more than the "leave" vote during Brexit or even Donald Trump's odds during the presidential race. So why are her chances of winning so substantial? Matthew Shaddick, the head of political odds at Ladbrokes, [has a few theories](, including the possibility that some gamblers are still confused over French election law. Ultimately though, when it comes to Wall Street, nobody wants to be the person to definitively state "Le Pen is going to lose" because then if she wins, that person will look like the ultimate idiot. After so many people got burned on Trump and Brexit, nobody wants to be the fool who got it wrong three times. Far safer to just say "the odds are against her, but she has a 30 percent chance of winning" because at least then if she does succeed, most people can conceptualize that a 30 percent chance is not that far of a longshot. This then is the dynamic: A massive event on the horizon and people have all kinds of ulterior career reasons to not risk looking stupid. You received this message because you are subscribed to the Bloomberg Markets newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022