Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks are mixed with the European Euro Stoxx 50 down -0.07% and June S&Ps up +4.20 points. The euro strengthened against the dollar on speculation that ECB President Trichet will signal at today's monetary policy meeting for additional interest rate hikes starting next month. As expected, the BOE kept its benchmark rate at 0.50% and held its asset purchase target at 200 billion pounds following the conclusion of its monetary policy meeting. European stocks were undercut after the May Bank of France business sentiment fell -3 to 103, more than expectations of -1 to 106 and its lowest level in 8 months. Treasuries strengthened on comments from Philadelphia Fed President Plosser who said at a speech in London that "I expect the economy to expand at a moderate pace and for inflation to move back down from its current level as oil prices stabilize." Acting IMF head Lipsky said his organization is standing by its forecast for 4.4% global growth this year even as developed economies hit a "soft patch."
- The Asian stock markets today closed mixed with Japan up +0.19%, Hong Kong -0.23%, China -1.89%, Taiwan -0.07%, Australia +0.28%, Singapore -0.17%, South Korea -0.74%, India -0.05%. Chinese stocks closed lower, led by declines in real estate companies and property developers, amid concern the PBOC will continue to tighten monetary policy even as the global economy falters. China's seven-day repurchase rate, which measures interbank funding availability, rose 31 bp to 4.13%, the highest level this month on concerns the PBOC will lift interest rates to help damp inflation. Japanese stocks finished higher after the yen fell back from a 1-month high against the dollar and after Q1 Japan GDP was revised higher to a -3.5% annualized contraction from the originally reported -3.7% annualized decline.
- June S&Ps this morning are trading up +4.20 points. The US stock market yesterday gyrated on either side of unchanged and moved lower late and finished on its lows on concern the global economy is slowing: Dow Jones -0.18%, S&P 500 -0.42%, Nasdaq Composite -0.97%. The S&P 500, the Dow and the Nasdaq all fell to 2-1/2 month lows. Bearish factors for stocks included (1) the action by the World Bank to lower its global growth projection for this year to 3.2% from a Jan forecast of 3.3%, (2) the unexpected decline in Apr German industrial production, which reinforced concern that the global economic recovery is slowing, and (3) weakness in banks and credit-card issuers after the Senate voted on a bill that would let the Fed lower debit-card "swipe" fees, which may cut into bank profits.
- Bullish factors included (1) strength in energy producers as crude oil surged after weekly inventories fell more than expected and OPEC failed to raise its production quotas, (2) the Fed's Beige Book that stated the economy expanded at a "steady pace" in most of the US while slowing in 4 of 12 regions as consumers contended with higher food and fuel prices, and (3) gains in defensive stocks such as health care, consumer staples, and utilities as these companies are considered havens during an economic slowdown.
- September 10-year T-notes this morning are up +5 ticks. T-note prices yesterday moved higher on carry-over support from Tuesday's comments from Fed Chairman Bernanke that the US recovery is "frustratingly slow" along with the action by the World Bank to lower its global growth estimates for this year: TYU11 +14.5, FVU11 +11.5, EDZ11 +0.5. The 10-year T-note yield dropped to a 6-month low of 2.932%. Bullish factors included (1) carry-over support from Tuesday's comments from Fed Chairman Bernanke that record monetary stimulus is still needed to boost a "frustratingly slow" recovery, which indicates the Fed is nowhere near ending its record stimulus anytime soon, (2) the action by the World Bank to lower its global growth projection for this year to 3.2% from a Jan forecast of 3.3%, (3) decent demand for the Treasury's $21 billion auction of reopened 10-year T-notes that had a bid-to-cover ratio of 3.23, stronger than the 12-auction average of 3.11, and (4) the action by the Fed to purchase $6.409 of Treasuries as part of its asset purchase program. Bearish factors included (1) the Fed's Beige Book that stated the economy expanded at a "steady pace" in most of the US while slowing in 4 of 12 regions as consumers contended with higher food and fuel prices, and (2) supply pressures ahead of the Treasury's $13 billion auction of 30-year T-bonds on Thu.
- The dollar index this morning is little changed with the dollar/yen +0.16 yen and the euro/dollar +0.23 cents. The dollar index yesterday moved higher as the euro weakened on weaker than expected European economic data along with concern the European sovereign debt crisis may worsen: Dollar Index +0.409, USDJPY -0.207, EURUSD -0.01083. Bullish factors included (1) concern the European debt crisis may worsen after the IMF said its 26 billion euro loan to Portugal "entails important risks," and (2) weaker-than-expected economic data on Apr German exports along with the unexpected decline in Apr German industrial production, which suggests slower European economic growth that is euro negative. Bearish factors included (1) speculation the dollar's interest rate differentials will remain weak after Fed Chairman Bernanke said the "frustratingly slow" US recovery warrants sustained monetary stimulus, and (2) the action by China to buy a net 1.33 trillion yen ($16.6 billion) in Japanese long-term government bonds in Apr, the most since records began in 2005, which suggests China may purchase fewer US dollar assets as it diversifies its world's largest currency reserves.
- July crude oil prices this morning are trading up +58 cents a barrel and July gasoline +0.34 of a cent per gallon. Crude oil and gasoline prices yesterday fluctuated between losses and gains and settled mixed as crude rallied after OPEC failed to raise its production quotas and weekly DOE crude inventories fell by the most this year while a larger-than-expected increase in weekly DOE gasoline inventories undercut gasoline: CLN11 +$1.65, RBN11 -1.32. Bullish factors included (1) the inability of OPEC to reach an agreement on crude production for the first time in 20 years as it maintained crude output at current levels after 6 members opposed a Saudi-Arabian led group that urged an increase in production quotas, and (2) the larger-than-expected fall in weekly DOE crude inventories which had their biggest decline this year (-4.84 million bbl versus expectations of -1.38 million bbl. Bearish factors included (1) the stronger dollar, and (2) the larger-than-expected increases in weekly gasoline and distillate supplies (gasoline +2.21 million bbl versus expectations of +1.05 million bbl and distillates +810,000 bbl versus expectations of +125,000).
Global Financial Calendar
| Thursday 6/9/11 | |
|---|---|
| United States | |
| 0400 ET | Philadelphia Fed President Charles Plosser speaks at the Society of Business Economists Annual Conference in London. |
| 0830 ET | Weekly initial unemployment claims expected -3,000 to 419,000, previous -6,000 to 422,000. Weekly continuing claims expected -11,000 to 3.700 million, previous -1,000 to 3.711 million. |
| 0830 ET | Apr trade balance expected -$48.8 billion, Mar -$48.2 billion. |
| 1000 ET | Apr wholesale inventories expected +1.0%, Mar +1.1%. |
| 1130 ET | Fed Vice Chairman Janet Yellen speaks at the Cleveland Fed’s policy conference on “Housing, Human Capital, and Inequality.” |
| 1300 ET | Treasury auctions $13 billion 30-year T-bonds. |
| 1630 ET | Weekly money supply report and Fed balance sheet. |
| Japan | |
| 0100 ET | May Japan consumer confidence expected +1.4 to 34.5, Apr -5.5 to 33.1. |
| 0200 ET | Preliminary May Japan machine tool orders, Apr +32.3% y/y. |
| 1950 ET | Apr Japan tertiary industry index expected +2.7% m/m, Mar -6.0% m/m. |
| 1950 ET | May Japan domestic CGPI expected +0.2% m/m and +2.5% y/y, Apr +0.9% m/m and +2.5% y/y. |
| France | |
| 0100 ET | Revised Q1 French non-farm payrolls expected no change at +0.4% q/q. |
| 0230 ET | May Bank of France business sentiment expected -1 to 106, Apr -3 to 107. |
| United Kingdom | |
| 0700 ET | BOE announces interest rate decision and asset purchase target (expected no change to the 0.50% benchmark rate and no change to the 200 billion pound asset purchase target). |
| Euro-Zone | |
| 0745 ET | ECB announces interest rate decision (expected no change to the 1.25% 2-week refinancing rate). |
| 0830 ET | ECB President Jean-Claude Trichet speaks at monthly press conference. |
| Canada | |
| 0830 ET | Apr Canada new housing price index, Mar unchanged m/m and +1.9% y/y. |
| CHI | |
| 2200 ET | May China trade balance expected +$19.80 billion, Apr +$11.42 billion. May exports expected +22.0% y/y, Apr +29.9% y/y. May imports expected +22.5% y/y, Apr +21.8% y/y. |
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