Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are mixed with the Euro Stoxx 50 up +3.03% and Dec S&Ps up +19.20 points. Treasuries and commodities are weaker as copper slid to a 14-month low and crude posted a 1-1/2 month low on concern over contagion of the European sovereign-debt crisis after credit default swaps to insure the government debts of France, Germany and Belgium all rose to records. The euro sank to an 8-month low against the dollar after Treasury Secretary Geithner told the annual meeting of the IMF that failure to combat the Greek-led turmoil threatens "cascading default, bank runs and catastrophic risk," while BOC Governor Carney said the European banking system is "undercapitalized" and estimated that 1 trillion euros ($1.3 trillion) may be needed to resolve the European debt crisis. The euro also fell after an ECB official said the central bank may restart its covered-bond purchase program when it meets next week. The spokesman for the European Commission said Greece faces a "moment of truth" and has to fully implement its savings plans in order to qualify for the next installment of international aid. Gains in European bank stocks led gains in the overall market after BOF Governor Noyer told Journal du Dimanche that French banks have enough capital to withstand possible losses from Greek-related risks and ECB Council member Nowotny told Market News International that he cannot exclude that the ECB will lower interest rates when it meets again next week. Limiting gains in European stocks was the decline in the Sep German IFO business climate by -1.2 to a 15-month low of 107.5, although it fell less than expectations of -2.2 to 106.5.
- Asian stocks today closed mostly with Japan down -2.17%, China -2.19%, Australia -1.01%, South Korea -2.03%, India -0.69%. China's Shanghai Stock Index tumbled to a 14-1/2 month low after PBOC Governor Zhou Xiaochuan said inflation remains China's "top concern," which fueled speculation the PBOC will increase measures to curb prices that will slow economic growth. Japan's Nikkei 225 Stock Index slid to a 6-1/4 month low as Japanese markets played catch-up after being closed last Friday for holiday and after EU leaders failed to come up with a unified response to the European debt crisis, which threatens to curb economic growth and weaken demand for Asian exports.
- December S&Ps this morning are trading sharply higher by +19.20 points. The US stock market last Friday fluctuated between gains and losses in volatile trade and pushed higher after mid-morning after G-20 finance chiefs meeting in Washington pledged to address risks in the global economy: Dow Jones +0.35, S&P 500 +0.61, Nasdaq Composite +1.12%. Bullish factors included (1) speculation that G-20 finance ministers meeting in Washington will take actions to stem the European financial crisis after they said they are "committed to a strong and coordinated international response to address the renewed challenges facing the global economy," (2) the announcement of a EU Greek debt buyback program open to all Greek debt and to all investors, which may reduce the stock of Greece's outstanding debt, and (3) speculation the ECB may take additional measures to boost growth and ease financial-market tensions, including cutting interest rates, after ECB Council member Coene said the ECB may act to address risks to growth as soon as next month should economic data disappoint.
- Bearish factors included (1) concern over contagion of the European debt crisis which boosted the flight-to-safety demand for the dollar after Moody's Investors Service cut Slovenia's local and foreign-currency government bond ratings to Aa3 from Aa2 and (2) European bank concerns after 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.
- December 10-year T-notes this morning are down -13.5 ticks. T-note prices last Friday erased an early rally and settled lower on long liquidation pressures and reduced safe-haven demand on speculation G-20 leaders meeting in Washington will act to prevent the European debt crisis from worsening: TYZ11 -25, FVZ11 -11.7, EDH12 +2.5. The 10-year T-note yield fell to an all-time low of 1.671% before settling at 1.807%. Bearish factors included (1) reduced safe-haven demand for Treasuries as the stock market rebounded from early losses and moved higher on speculation G-20 finance chiefs meeting in Washington will put forth measures to stem the European debt crisis (2) the announcement of a EU Greek debt buyback program open to all Greek debt and to all investors as part of Greece's second bailout, which may reduce the stock of Greece's outstanding debt, and (3) long liquidation and profit taking in Treasuries which had rallied sharply over the past week. Bullish factors included (1) increased safe-haven demand for Treasuries on contagion concerns from the European debt crisis after Moody's Investors Service cut Slovenia's local and foreign-currency government bond ratings and (2) carry-over strength from a rally in German bunds to a record high on European bank concerns after 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 dollar index this morning is little changed with the dollar/yen -0.32 yen and the euro/dollar +0.22 cents. The dollar index last Friday shed an early advance and closed little changed on reduced safe-haven demand after G-20 finance chiefs meeting in Washington pledged to address risks in the global economy: Dollar Index +0.057, USDJPY +0.367, EURUSD +0.00357. Bearish factors included (1) reduced safe-haven demand for the dollar after the stock market recovered from early losses and traded higher and (2) strength in the euro on speculation G-20 finance chiefs meeting in Washington make take further actions to stem the financial crisis. Bullish factors included (1) comments from ECB Council member Coene who 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, (2) the slump in Sep French consumer confidence to a 2-1/2 year low, which is euro negative, and (3) concern over contagion of the European debt crisis which boosted the flight-to-safety demand for the dollar after Moody's Investors Service cut Slovenia's local and foreign-currency government bond ratings to Aa3 from Aa2.
- Nov crude oil prices this morning are up +59 cents a barrel and Nov gasoline is +3.09 cents per gallon. Crude oil and gasoline prices last Friday gyrated between gains and losses the entire day and finally settled lower as global recession concerns offset the pledge by G-20 finance ministers to address risks to the global economy: CLX11 -$0.66, RBX11 -1.93. Nov crude and Nov gasoline fell to 1-1/2 month lows and nearest-futures Oct gasoline tumbled to a 7-1/4 month low. Bearish factors included (1) the fall in French consumer confidence to a 2-1/2 year low, which is negative for the economic outlook and energy demand and (2) growing concerns the global economy may fall into recession, which would decimate energy demand. Bullish factors included (1) the rebound in the stock market, which bolsters confidence in the economic outlook and energy demand and (2) speculation that global central banks will take action to prevent another financial crisis after G-20 finance chiefs said they are "committed to a strong and coordinated international response to address the renewed challenges facing the global economy."
Global Financial Calendar
| Monday 9/26/11 | |
|---|---|
| United States | |
| 0830 ET | Aug Chicago Fed national activity index expected -0.34 to -0.40, Jul +0.32 to -0.06. |
| 0830 ET | Fed Governor Sarah Bloom Raskin speaks on ?Loan Servicing: Where are We and Where are We Headed?? at the University of Maryland?s Robert H. Smith School of Business. |
| 0930 ET | St. Louis Fed President James Bullard speaks at a Medley Global Advisors event ?Policy Making After the Crisis.? |
| 1000 ET | Aug new home sales expected -1.0% to 295,000, Jul-0.7% to 298,000. |
| 1130 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| 1500 ET | Minneapolis Fed President Narayana Kocherlakota will be part of a panel discussion at a seminar on Sovereign Debt at the CME Group World Headquarters in Chicago. |
| Germany | |
| 0400 ET | Sep German IFO business climate expected -2.2 to 106.5, Aug -4.2 to 108.7. Sep IFO current assessment expected -2.4 to 115.7, Aug -3.3 to 118.1. Sep IFO expectations expected -2.8 to 97.3, Aug -4.9 to 100.1. |
| Euro-Zone | |
| 0930 ET | ECB Council member Lorenzo Bini Smaghi speaks at a panel discussion on ?Aftershocks: Policymaking After the Crisis? at a conference organized by Medley Global Advisors. |
| 1200 ET | ECB Council member Jens Weidmann speaks on ?Germany?s Role in the Global Economy? during a luncheon speech at the American Council on Germany. |
| France | |
| 1200 ET | Aug French jobseekers net change, Jul +36,100. Aug total jobseekers, Jul 2,756,500. |
| Japan | |
| 1950 ET | Aug Japan corporate service price index expected -0.4% y/y, Jul -0.5% y/y. |
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