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WASHINGTON (MarketWatch) — President Barack Obama on Thursday formally informed Congress that the federal debt limit must be increased, setting in motion a plan to increase it by $1.2 trillion. The letter triggers a 15-day objection period where Congress has the opportunity to block the increase. Any vote to disapprove the debt celing increase is expected to fail because Obama could veto the disapproval and opponents are not expected to have the votes to override it.

NEW YORK (MarketWatch) — The Treasury Department sold $13 billion in 30-year bonds on Thursday at a yield of 2.985%, higher than traders expected, making for a weak ending to the government’s auctions for the week. Bidders offered to buy 2.6 times the amount of debt sold, lower than the average of 2.91 times at the last four comparable auctions. Indirect bidders, a group which includes foreign central banks, bought 31.9% of the sale, versus an average 34.6% in recent auctions. Direct bidders, a group which includes domestic money managers, purchased another 7.2%, compared to 22.5% on average. After the auction, the broader bond market turned down. Yields on benchmark 10-year notes , which move inversely to prices, rose 3 basis points to 1.94%.

WASHINGTON (MarketWatch) – China can do more and move faster to shift its growth model from exports to domestic consumption, U.S. Treasury Secretary Timothy Geithner said Thursday. “In some ways, the events of the last four years – a world in crisis with huge cliffs in external demand facing China – underscored the imperative of China moving in this direction,” Geithner said in a broad-ranging interview with Japanese broadcaster NHK. “The exchange rate is just one part of that,” he said. Geithner comments come at the end of a quick trip to Beijing and Tokyo for bilateral talks. On Europe, Geithner said the International Monetary Fund would continue to play a supportive role to stem the debt crisis. “But [the IMF] can only be effective in that context in support of a stronger European commitment to make sure they have in place a monetary union that can work,” he said. “We have to make sure that Europe moves first and gives the world something that the world can support,” he added.

NEW YORK (MarketWatch) — The euro extended gains against the dollar to $1.28 Thursday after European Central Bank President Mario Draghi ended his monthly press conference. Some analysts noted comments that the he felt the ECB’s first long-term refinancing operation is helping to improve the funding situation of banks, and that the ECB is working on making changes to collateral rules for the next LTRO. “The euro-dollar rallied because Draghi made no mention of more easing,” said Kathy Lien, director of currency research at GFT. “Its gains should still be limited because assuming that the central bank has shut the door on more stimulus because two small bond auctions went well, is premature.” The euro rose to $1.2814 from $1.2661 Wednesday. It hasn’t closed above $1.28 since Jan. 4. The dollar index , which measures the greenback against a basket of six currencies, fell to 80.820, down from 81.313 in late North American action on Wednesday.

NEW YORK (MarketWatch) — The dollar pared losses and Treasury prices turned up slightly on Thursday after a report said U.S. retail sales rose a less-than-forecast 0.1% in December. A separate report showed jobless claims rose to 399,000 in the latest week, a higher level than predicted. Yields on 10-year notes , which move inversely to prices, fell 1 basis point to 1.91%. The dollar index , which measures the greenback against a basket of six currencies, traded at 81.235, from 81.149 before the data and down from 81.313 in late North American action on Wednesday. The euro pared gains to $1.2724, from $1.2661 Wednesday. Traders will also tune into comments from European Central Bank President Mario Draghi. The euro was up before the data following very well-received auctions of Spanish and Italian debt.

WASHINGTON (MarketWatch) – Sales at U.S. retailers increased 0.1% in December to a seasonally adjusted $400.6 billion, the Commerce Department estimated Thursday. Sales rose an upwardly revised 0.4% in November. Details of the December report were mixed. Ahead of the report, economists surveyed by MarketWatch expected total sales to rise 0.3%. Excluding the 1.5% rise in motor vehicle sales, retail sales fell 0.2%. Economists had expected ex-auto sales to rise 0.3%. Core sales, excluding autos, gasoline and building materials, fell 0.2% in December after a 0.3% gain in November. This is the first drop in core sales since last December.

FRANKFURT (MarketWatch) — The European Central Bank on Thursday left its key lending rate unchanged at 1%, as expected. ECB President Mario Draghi’s monthly news conference is scheduled to begin at 8:30 a.m. Eastern.

FRANKFURT (MarketWatch) — The Bank of England, as expected, held its key lending rate at a record low 0.5% on Thursday and made no changes to its 275 billion pound ($421.5 billion) asset-purchase program, which is the centerpiece of its quantitative-easing strategy. Attention now turns to the European Central Bank, which is also expected to stay on the sidelines when it announces its monthly policy decision at 7:45 a.m. Eastern. ECB President Mario Draghi’s monthly news conference is set to begin at 8:30 a.m. Eastern.

FRANKFURT (MarketWatch) — Italian and Spanish government bonds rose, pushing yields lower, after both countries sold debt in closely-watched auctions Thursday. Italy’s 10-year yield was down 27 basis points at 6.61% in recent action, while Spain’s 10-year yield fell 9 basis points to 5.23%. A basis point is a hundredth of a percentage point. Spain on Thursday sold nearly 10 billion euros ($12.7 billion) of various bonds, nearly double the top end of its target range, as borrowing costs declined. Italy saw the cost of borrowing for 12 months decine to 2.74% from 5.95% in December as it sold 8.5 billion euros of bills.

FRANKFURT (MarketWatch) — Italy’s Treasury on Thursday sold 8.5 billion euros ($10.8 billion) of 12-month bills at auction, news reports said, with the yield falling to 2.74% from 5.95% in a December sale. Italy also sold 3.5 billion euros of bills set to mature at the end of May.