Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks are mixed with the European Euro Stoxx down 0.27% and Sep S&Ps up 2.80 points. Last night's speeches to the nation by President Obama and Speaker Boehner did nothing to help the markets since they simply highlighted the political gridlock in Washington and the political posturing. The markets would like to see significant deficit reduction, but at this point the markets simply want to get through a debt ceiling hike without a Treasury default. Several Wall Street analysts are now saying that the Treasury can last a week or two beyond its August 2 drop-dead date because of higher-than-expected tax revenues, although the Treasury has so far made no mention of extending its drop-dead date. India's central bank today raised its repurchase rate by 50 bp to 8.0%, which was larger than the expected 25 bp rate hike and highlighted the upward pressure on short-term rates in the developing world where inflation is a matter of significant concern. India's June wholesale-price inflation rate rose to +9.5%, which is even higher than CPI rates of +6.7% in Brazil, +9.4% in Russia, and +6.4% in China. India's central bank raised its GDP forecast for the fiscal year ending in March 2012 by 1 percentage point to +7.0%. Today's UK Q2 GDP report of +0.2% q/q and +0.7% y/y was in line with market expectations but illustrated the slowdown seen from Q1's +1.5% m/m and +1.6% y/y. The German GfK consumer confidence survey index fell slightly to 5.4 in Aug from a revised 5.5 in July (preliminary 5.7) and was weaker than the market consensus of 5.6. UBS is down 1.7% today after issuing a disappointing earnings report and causing concern about European bank profits in general.
- The Asian stock markets today closed mostly higher, except for India which closed down 1.9% due to the larger-than-expected rate hike: Japan +0.47%, Hong Kong +1.25%, China +0.32%, Taiwan +1.28%, Australia +0.95%, Singapore +0.47%, South Korea +0.85%.
- September S&Ps this morning are trading slightly higher by 2.80 points (+0.21%) as the market hopes for some compromise after last night's dueling Obama/Boehner speeches. Ford's Q2 EPS ex-items report of 65 cents was stronger than the consensus of 61 cents. The US stock market on Monday opened sharply lower on the debt ceiling stalemate but then recovered some ground to close just moderately lower: Dow Industrials -0.70%, S&P 500 -0.56%, Nasdaq Composite -0.56%. Stocks were also hurt by Moody's 3-notch cut in Greece's credit rating, although the rating agency was simply catching up with its competitors and with what the markets already knew following last Thursday's Eurozone debt deal, i.e., that Greece will be effectively defaulting on its securities with a 21% haircut on the Greek bond swap deal offered by the Eurozone. US stocks were also hurt by Monday's sharp 3% sell-off in Chinese stocks tied to a weekend high-speed train crash that caused the government to call for a review of transportation safety and could slow investment in transportation projects.
- September 10-year T-notes this morning are down 4 ticks on reduced safe-haven demand as Asian stocks rebounded higher today and Sep S&Ps are trading higher. T-note prices on Monday closed mildly lower due concern that the debt ceiling stalemate will cause a U.S. credit rating cut even if Washington raises the debt ceiling: TYU11 -6.5, FVU11 -2.5, EDZ11 -2.0. Pimco CEO Mohamed A. El-Erian said that the U.S. government will be ?extremely vulnerable? to losing its AAA credit rating even if Washington produces a debt ceiling hike. He said, Stock markets around the globe will look to price in a greater uncertainty premium on account of political squabbles in the world?s largest economy and the increasing risk that it may lose its sacred AAA rating.?
- The dollar index this morning is trading moderately lower by 0.46 points with USDJPY down 0.21 yen and EURUSD up 1.0 cent as concern continues about the U.S. debt ceiling battle. The dollar index on Monday closed slightly lower: Dollar Index -0.099, USDJPY -0.250, EURUSD +0.0017. The main bearish factor for the dollar was the debt ceiling spectacle in Washington, which is giving pause to overseas investors about investing in a country with such an unstable political and fiscal environment. The euro continued to see general support from last Thursday's Eurozone deal for a second Greek bailout and strengthening of the European Financial Stability Fund. The Swiss franc on Monday hit a record high due to safe-haven demand and carry-over from record gold prices.
- Sep crude oil prices this morning are trading up $0.53 a barrel and Sep gasoline is up 0.95 cents per gallon as the market shakes off concerns about the U.S. debt ceiling and focuses on tighter product inventories and generally strong global fuel demand. Crude oil and gasoline prices closed lower on Monday due to concerns about economic fallout and weaker fuel demand from the Washington debt ceiling battle: CLU11 -0.67, RBU11 -0.0089. The market consensus for Wednesday's DOE report are for a 1.75 million barrel drop in crude oil inventories, a 125,000 barrel increase in gasoline inventories, and a 1.6 million barrel increase in distillate inventories.
Global Financial Calendar
| Tuesday 7/26/11 | |
|---|---|
| United States | |
| 0745 ET | ICSC (Int?l Council of Shopping Centers) weekly retailer sales. |
| 0855 ET | Redbook weekly retailer sales. |
| 0900 ET | May S&P/CaseShiller composite-20 home price index expected unchanged m/m and -4.6% y/y, Apr -0.1% m/m and -4.0% y/y. |
| 1000 ET | Jul consumer confidence expected -2.5 to 56.0, Jun -3.2 to 58.5. |
| 1000 ET | Jul Richmond Fed manufacturing index expected +2 to 5, Jun +9 to 3. |
| 1000 ET | Jun new home sales expected +0.8% to 322,000, May -2.1% to 319,000. |
| 1130 ET | Weekly 4-week T-bill auction. |
| 1300 ET | Treasury auctions $35 billion 2-year T-notes. |
| Germany | |
| 0200 ET | Aug German GfK consumer confidence survey expected -0.1 to 5.6, Jul +0.1 to 5.7. |
| France | |
| 0245 ET | Jul French consumer confidence indicator expected -1 to 82, Jun unchanged at 83. |
| United Kingdom | |
| 0430 ET | UK Q2 GDP expected +0.2% q/q and +0.8% y/y, Q1 +0.5% q/q and +1.6% y/y. |
| 0430 ET | May UK index of services expected +0.8% m/m and +0.9% 3-mo/3-mo, Apr -1.2% m/m and +0.9% 3-mo/3-mo. |
| CHI | |
| 2200 ET | Jun China industrial profits, May +27.9% year-to-date y/y. |
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