Barchart Moring Call 1/10

Barchart Morning Call

BC - 1 hr 46 mins ago

Overnight Developments

• March E-mini S&Ps this morning are mildly higher by +0.26% on support from the strong Chinese Dec exports report of +14.1% y/y, which suggested an ongoing recovery in the Chinese economy. The BOE and ECB both left their respective monetary policies unchanged today as expected. European stocks are slightly higher by +0.05%. Asian stocks today closed higher nearly across the board. Japan closed +0.70%, Hong Kong closed +0.59%, and China closed +0.18%. Commodity prices are sharply higher this morning by +0.73% on a boost from the Chinese exports report. Feb crude oil is up +1.36%, Feb gasoline is up +0.79%, Dec gold is up +0.46%, March copper is up +1.16%, and agriculture prices are higher across the board. The dollar index is down -0.17% on reduced safe-haven demand. EUR/USD is up +0.27%. USD/JPY is up +0.25%. March 10-year T-note prices are down 6 ticks.
• The ECB this morning announced that it left its refinancing rate unchanged at 0.75%, which was in line with market expectations. With the Eurozone debt crisis contained for the time being, the ECB expects the Eurozone economy to stabilize in the first half of 2013 and then slowly improve in the second half of 2013. ECB President Draghi will hold a press conference shortly.
• The Bank of England at its meeting today left its policy unchanged, which was fully in line with market expectations. The BOE left the base rate unchanged at 0.50% and left its asset purchase target unchanged at 375 billion pounds.
• China's Dec exports were reported last night at +14.1% y/y, which was much stronger than market expectations of +5.0% y/y and was up from +2.9% in November. The report supported the consensus view that the Chinese economy bottomed out in Q3 and is back on the upswing. China's Dec imports were up +6.0% y/y, which was stronger than market expectations of +3.5% y/y and was a positive sign for Chinese domestic demand. China's trade surplus of $31.60 billion was much larger than market expectations of $20.0 billion.
• Spain today successfully sold 5.8 billion euros of 2-year, 5-year and 13-year bonds, which was more than its target of 5 billion euros. The Spanish 2-year bond yield today fell to a new 2-year low and the 10-year yield fell below 5% for the first time since March.
• Tokyo Dec office vacancies fell slightly to 8.67% from 8.76% in Nov.
• Japan's Nov leading index fell by -0.9 points to 91.9 from 92.8 in Oct. The Nov coincident index fell by -0.6 points to 90.1% from 90.7% in Oct.
• President Obama today is expected to name Jack Lew as the new Treasury Secretary to replace outgoing Timothy Geithner. Mr. Lew's appointment signals the focus that President Obama expects to place on budget negotiations considerin that Mr. Lew is an expert on the federal budget and is regarded as a tough negotiator. The appointment suggests that Mr. Obama plans to play hardball in upcoming budget negotiations, thus making deals more contentious and drawn out.
  Market Comments
  • March E-mini S&Ps this morning are up +3.75 points (+0.26%) on support from the strong Chinese exports report. The S&P 500 index on Wednesday closed mildly higher on some optimism about earnings after Alcoa expressed confidence about a pickup in Chinese economic growth and industrial metal demand. Closes: S&P 500 +0.27%, Dow Jones +0.46%, Nasdaq +0.33%.
  • March 10-year T-notes this morning are down 6 ticks on the higher trade in stocks and the improved global economic prospects suggested by the Chinese exports report. March 10-year T-note prices on Wednesday closed higher on some continued short-covering after last week's plunge following the fiscal cliff deal. Demand at yesterday's 10-year T-note auction was a little light with a bid-cover ratio of 2.83 (below the 12-auction average of 2.99) and with 28.5% taken by indirect bidders (below the 12-auction average of 37.3%). Closes: TYH3 +6.5, FVH3 +4.25.
  • The dollar index this morning is down -0.17 points (-0.22%) on reduced safe-haven demand. EUR/USD is up +0.0035 (+0.27%) and USD/JPY is up +0.22 (+0.25%). The dollar index on Wednesday closed mildly higher as foreign investment money continues to be attracted to the U.S. EUR/USD closed mildly lower on the weaker-than-expected German industrial production report of +0.2% (vs expectations of +1.0%). Closes: Dollar index +0.212 (+0.26%), EUR/USD -0.0017 (-0.13%), USD/JPY +0.83 (+0.95%).
  • Feb WTI crude oil prices this morning are up +1.27 (+1.36%) and Feb gasoline is up +0.0219 (+0.79%). Feb crude oil and gasoline prices on Wednesday closed lower. The DOE crude oil inventory report of +1.314 mln bbl (below expectations of +2.0 mln bbl) was supportive, but there was a bearish 7.412 mln bbl increase in gasoline inventories (far above expectations of +2.5 mln bbl) and a bearish 6.777 mln bbl increase in distillate inventories (far above expectations of 1.9 mln bbls). Also on the bearish side, U.S. crude oil production rose by +0.2% w/w to a new 19-3/4 year high of 7.002 mln bpd. Closes: CLG3 -0.05 (-0.05%), RBG3 -0.0155 (-0.55%).
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    Today's U.S. Earnings ReportsEarnings reports (ranked by market cap): MSM-MSC Indl Direct (consensus $1.01), SNX-Synnex Corp (1.03), SVU-Supervalu (0.07).
    Global Financial Calendar

    Thursday 1/10/13
    United States
    0830 ET	Weekly initial unemployment claims expected -7,000 to 365,000, previous +10,000 to 372,000. Weekly continuing claims expected -17,000 to 3.228 mln, previous +44,000 to 3.245 mln.
    0830 ET	USDA weekly Export Sales.
    1000 ET	Nov wholesale inventories expected +0.3% m/m, Oct +0.6% m/m.
    1300 ET	Treasury auction of $13 billion in 30-year T-bonds.
    1310 ET	Kansas City Fed President George speaks on 2013 Economic Outlook in Kansas City.
    1400 ET	St. Louis Fed President James Bullard speaks on monetary policy and the U.S. economic outlook in Madison.
    2000 ET	Minneapolis Fed President Narayana Kocherlakota speaks at town hall meeting in Minneapolis.
    Japan
    0000 ET	Japan Nov leading index, Oct 92.8. Nov coincident index, Oct 90.7.
    1850 ET	Japan Nov current account expected -30 bln yen, Oct 376.9 bln yen. Nov adjusted current account expected 310 bln yen, Oct 414.1 bln yen. Japan Nov trade balance BOP basis expected -831 mln yen, Oct -450.3 bln yen.
    1850 ET	Japan Dec bank lending ex-trusts, Nov +1.3% y/y.
    United Kingdom
    0700 ET	Bank of England announces monetary meeting outcome. Base rate expected unch at 0.50% and asset purchase target expected unchanged at 375 bln pounds.
    EUR	0745 ET
    2030 ET	China Dec CPI, Nov +2.0% y/y. Dec PPI, Nov -2.2% y/y.
    China
    2030 ET	China Dec CPI expected +2.3% y/y, Nov +2.0% y/y. China Dec PPI expected -1.8% y/y, Nov -2.2% y/y.

    
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