Barchart's Morning Call 8/20

Barchart Morning Call

BC - 1 min ago

Overnight Developments

• Sep E-mini S&Ps this morning are trading slightly higher by +0.11% on support from a 0.50% rally in European stocks and on the Der Spiegel report that the ECB is considering a plan to cap Eurozone peripheral bond yields. Commodity prices are trading mildly higher by +0.31% on average with Oct crude oil up +0.05%, Dec gold down -0.11%, Sep copper down -0.94%, and agricultural prices trading higher. The dollar index is trading slightly lower by -0.03% and EUR/USD is down -0.13%. Sep 10-year T-notes are down -8 ticks.
• Asian stocks today closed mostly lower on reduced hopes for Chinese easing with the strongest home price report in 14 months: Japan +0.09%, Hong Kong -0.06%, China -0.51%, Taiwan -0.48%, Australia -0.13%, South Korea -0.07%.
• The Bundesbank today said that the ECB's plan to begin a government bond purchase program entails "significant stability risks." The Bundesbank said that the sharing of solvency risks is a decision that should be taken by governments or parliaments, not by the ECB.
• Der Spiegel reported over the weekend that the ECB is considering setting yield caps on peripheral sovereign bond yields with the potential for essentially unlimited bond buying. The Spanish 10-year bond yield today fell sharply by 20 bp to 6.21% and the Italian bond yield fell by 6 bp to 5.71% on the Der Spiegel report.
• The Chinese central bank has no plans over the short-term to cut bank reserve-requirement ratios, according to commentary in the Chinese central bank's Finance News. Over the weekend, data showed that China home prices rose in 49 of the 70 cities tracked by the government survey, the best report in 14 months. The report reduced hopes for further stimulus measures from the Chinese government, which is trying to clamp down on property prices.
• Japan's June final-June leading index rose 0.6 points to 93.2 from the previous report of 92.6.
  Market Comments
  • Sep E-mini S&Ps this morning are up +1.50 points (+0.11%), supported by this morning's 0.50% rally in the Euro Stoxx 50 and the report that the ECB is considering yield caps on peripheral bond yields. The stock market on Friday fluctuated on both sides of unchanged early and then pushed higher late and closed with modest gains on better-than-expected economic data: S&P 500 +0.19%, Dow Jones +0.19%, Nasdaq 100 +0.44%. Stock prices were supported Friday on reduced European debt concerns after Spain's 10-year bond yield fell to a 6-week low and as Aug U.S. University of Michigan consumer confidence and July leading indicators strengthened more than expected.
  • Sep 10-year T-notes this morning are down 8 ticks on reduced safe-haven demand with the report that the ECB is considering yield caps. T-note prices on Friday moved higher on short covering and finished with moderate gains as they snapped a 4-session decline: TYU2 +4.5, FVU2 +2.2. An unexpected increase in the Aug U.S. University of Michigan consumer confidence and a drop in the Spanish 10-year bond yield to a 6-week low reduced safe-haven demand for T-notes and capped Friday's advance.
  • The dollar index this morning is down -0.024 (-0.03%). EUR/USD is down -0.0016 (-0.13%) after the news of Bundesbank opposition to the ECB's bond buying program offset the weekend Der Spiegel report that the ECB is considering yield caps. USD/JPY is down -0.04 (-0.05%). The dollar index on Friday shook off early losses and closed higher after the yield spread between U.S. and German 10-year government securities widened to a 2-1/2 month high of 32 bp, which improved the dollar's interest rate differentials and undercut the euro: Dollar index +0.239 (+0.29%), EUR/USD -0.19%, USD/JPY +0.28%. The yen fell to a 1-month low against the dollar on reduced safe-haven demand as investors sold the yen in favor of higher-yielding, higher-risk assets.
  • Oct WTI crude oil prices this morning are trading slightly higher by +0.05 (+0.05%) and Oct gasoline is up +0.0114 (+0.40%) on improved economic sentiment with this morning's modest rally in U.S. and European stocks. Crude oil and gasoline prices on Friday posted 3-month highs early but then shed their gains and settled mixed after a White House spokesperson said the release of crude form the SPR to increase crude supplies "is an option that is on the table," and after the API said U.S oil demand in July fell -2.7% y/y to a nearly 4-year low of 18.1 million barrels a day: CLU2 +0.41 (+0.43%), RBU2 -0.0557 (-1.81%). Energy prices were supported early in the session on the stronger-than-expected Aug University of Michigan consumer confidence along with heightened Middle East tensions after Hezbollah's chief said Iran's response to an attack by Israel would be "huge."
  • For the complete subscription version of this daily report (plus a 13-page big-picture weekly report), along with the earliest possible delivery in the morning, please visit http://www.barchart.com/register/crbfms_usmc.php
    Today's U.S. Earnings Reports Earnings reports (ranked by market cap): LOW-Lowe's (Consensus $0.70), URBN-Urban Outfitters (0.33), NDSN-Nordson (0.99), CIM-Chimera Investment (0.10), CUB-Cubic Corp. (0.77).
    Global Financial Calendar
    

    Monday 8/20/12
    United States
    0830 ET	July Chicago Fed national activity index, June -0.15.
    1100 ET	USDA weekly grain export inspections.
    1130 ET	Weekly 3-mo and 6-mo T-bill auctions.
    1600 ET	USDA Crop Progress
    Japan
    0100 ET	Revised Japan Jun leading index CI, previous 92.6.. Revised Jun coincident index CI, previous 93.8.
    Germany
    0200 ET	German Finance Ministry publishes monthly report for Aug.
    Euro-Zone
    0500 ET	Jun Euro-Zone construction output, May +0.1% m/m and -8.4% y/y.

    Barchart.com provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.