Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are lower with the Euro Stoxx 50 down -1.13% and Dec S&Ps down -7.90 points. The dollar is little changed and commodities are weaker with copper plunging to a 14-month low and crude oil sliding to a 1-1/2 month low. The 10-year German bund yield fell to a record low 1.642% after European bank bond spreads soared as concern increased the financial system is in jeopardy as the economy slows and Greece flirts with default. The Barclays Capital Euro Aggregate Banking Senior Index rose 17 bp to a record 339, higher than the 325 bp reached in Dec 2008 after Lehman Brothers collapsed. The euro shed early gains and turned lower after ECB Council member Coene said the ECB may act to address risks to growth as soon as next month should economic data disappoint, which fueled speculation of an ECB interest rate cut. U.S. and European stocks fell even after the Group of 20 finance chiefs meeting in Washington said they are "committed to a strong and coordinated international response to address the renewed challenges facing the global economy." The Sep French consumer confidence indicator fell -2 to a 2-1/2 year low of 80 as the European debt crisis takes its toll on consumer attitudes. Dollar demand remains strong as the 3-month dollar Libor rate rose for the 11th consecutive day to a 13-month high of 0.36022%.
- Asian stocks today closed lower with Japan closed for holiday, China down -0.60%, Australia -1.56%, South Korea -5.79%, India -1.22%. Asian exporters moved lower on concern a slowdown in global economic growth will sap demand for the region's exports. China's Shanghai Stock Index tumbled to a 14-month low, led by losses in energy producers and mining companies, as fears of a global recession pummel commodity prices. Losses in Chinese stocks were limited after the Securities Times reported that China's social security fund plans to invest more than 10 billion yuan ($1.6 billion) in the nation's stock market.
- December S&Ps this morning are trading down -7.90 points. The US stock market yesterday plummeted on concern the global economy is heading toward another recession: Dow Jones -3.51, S&P 500 -3.19, Nasdaq Composite -3.25%. The S&P 500 fell to a 1-month low, the Dow dropped to a 1-1/2 month low and the Nasdaq posted a 1-week low. Bearish factors included (1) concern that the global economy maybe heading toward recession after the Sep China HSBC manufacturing PMI contracted for a third month and the Sep Euro-Zone PMI composite contracted at its weakest level in over 2 years, (2) the larger-than-expected filing of weekly initial U.S. unemployment claims (-9,000 to 423,000 versus expectations of -8,000 to 420,000), (3) carry-over weakness from a slump in European bank stocks after Standard & Poor's cut the credit ratings of Italian banks Intesa Sanpaolo and Mediobanca to A with a negative outlook and lowered the outlook for 8 other Italian banks, including Italy's biggest lender UniCredit SpA, to negative from stable, and (4) a slump in energy and raw material producers on concern demand for commodities will falter amid an economic slowdown.
- Bullish factors included (1) the larger-than-expected increase in the Jul FHFA house purchase price index which posted its biggest monthly gain in 5-3/4 years (+0.8% m/m versus expectations of +0.1% m/m), (2) the larger-than-expected increase in Aug leading indicators which gained for the fourth consecutive month (+0.3% m/m versus expectations of +0.1% m/m), and (3) the fall in the 10-year T-note yield to a record low 1.695%.
- Freeport-McMoRan (FCX) fell 1.6% in European trading as metals prices sank, with copper dropping to a 14-month low.
- December 10-year T-notes this morning are down -5.5 ticks. T-note prices yesterday rallied sharply on increased safe-haven demand as global equity markets tumbled over concern world economic growth was grinding to a halt along with carry-over support from Wednesday's Fed announcement that it will increase its long-term Treasury holdings: TYZ11 +1-00/32, FVZ11 +12, EDH12 -3.5. The 10-year T-note yield fell to an all-time low of 1.695%. Bullish factors included (1) global economic growth concerns after the Sep China HSBC manufacturing PMI contracted for a third month and the Sep Euro-Zone PMI composite contracted at its weakest level in over 2 years, (2) carry-over support from Wednesday's Fed announcement that it will increase its long-term Treasury holdings by $400 billion, and (3) increased safe-haven demand after global equity markets plunged. Bearish factors included (1) the larger-than-expected increase in the Jul FHFA house purchase price index which posted its biggest monthly gain in 5-3/4 years (+0.8% m/m versus expectations of +0.1% m/m) and (2) the larger-than-expected increase in Aug leading indicators which gained for the fourth consecutive month (+0.3% m/m versus expectations of +0.1% m/m).
- The dollar index this morning is higher with the dollar/yen +0.02 yen and the euro/dollar -0.15 cents. The dollar index yesterday rallied sharply to a 7-1/4 month high on concern that global economic growth is stalling and on increased safe-haven demand as world stock markets plunged: Dollar Index +1.113, USDJPY -0.211, EURUSD -0.01079. Bullish factors included (1) the slump in the euro to an 8-month low against the dollar after the Sep Euro-Zone PMI composite index contracted for the first time in over 2 years and Sep Euro-Zone consumer confidence fell to a 2-year low, (2) weakness in Chinese manufacturing that may further weaken the global economy after the Sep China HSBC manufacturing PMI contracted for a third month, (3) the increase in the 3-month dollar Libor rate for the 10th straight day to a 13-month high of 0.35806%, a sign of strong dollar demand, (4) increased safe-haven demand for the dollar on concern the European debt crisis may worsen after The European Union's financial-services commissioner told the Le Figaro newspaper that he can't rule out that some European banks will need state aid, and (5) a surge in the safe-haven demand for the dollar as global stock markets sold off.
- Nov crude oil prices this morning are down -$1.58 a barrel at a 1-1/2 month low and Nov gasoline is -1.00 cent per gallon. Crude oil and gasoline prices plunged yesterday after the dollar surged and after Chinese and European manufacturing growth contracted: CLX11 -$5.41, RBX11 -11.27. Nov crude fell to a 1-month low, Nov gasoline slipped to a 1-1/2 month low and nearest-futures Oct gasoline tumbled to a 7-1/4 month low. Bearish factors included (1) the rally in the dollar index to a 7-1/4 month high, which discourages investment demand in commodities, (2) concern a slowdown in global economic growth will decimate energy demand after the Fed warned late Wednesday of “significant downside risks” to the U.S. economy, the Sep Euro-Zone PMI composite index weakened to a 2-year low and the Sep China HSBC manufacturing PMI contracted for a third month, (3) the plunge in global equity markets which undercuts confidence in the economic outlook and energy demand, and (4) the action by Goldman Sachs to cut its 3-month crude oil price forecast to $97.50 a barrel from a previous estimate of $115 a barrel. Bullish factors included (1) the larger-than-expected increase in Aug U.S. leading indicators and (2) the possibility of OPEC production cuts after an unnamed OPEC official said OPEC will make a collective decision on whether to cut supply at the cartel’s next meeting in Dec as it monitors the global economy and the pace of Libya’s output recovery.
Global Financial Calendar
| Friday 9/23/11 | |
|---|---|
| United States | |
| 1400 ET | New York Fed President William Dudley speaks on a panel in Washington D.C. discussing “Readiness for the Next Financial Crisis.” |
| 1400 ET | San Francisco Fed President John Williams speaks on “Unconventional Monetary Policy” at the SNB Research Conference in Zurich, Switzerland. |
| France | |
| 0245 ET | Sep French consumer confidence index expected -3 to 83. |
| 0245 ET | Revised Q2 French wages expected no change at 0.6% q/q. |
| 0245 ET | Sep French business confidence indicator expected -5 to 100, Aug |
| Euro-Zone | |
| 1630 ET | ECB President Jean-Claude Trichet delivers closing remarks at the Bretton Woods Committee’s International Council in Washington. |
| Japan | |
| n/a | Japanese markets closed for Autumnal Equinox Day. |
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