Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are mixed with the Euro Stoxx 50 up +0.44% and Dec S&Ps up +9.50 points. Treasuries are higher as the dollar slides and commodities are mixed after members of the European Commission, ECB and IMF (the troika) say they will return to Greece tomorrow to review the Greek government's budget-cutting plans. German Chancellor Merkel said policy makers may need to renegotiate the terms of Greece's second bailout after the troika finishes its latest review of Greece's finances, as Greece's "umbers in Sep, as it now seems, were again different from what we expected under the program." European Commission President Barroso called for faster creation of a rescue fund and said he will press ahead with common bonds for the Euro-Zone, a proposal Germany opposes. The head of Finland's finance committee said the Finnish parliament will approve the expansion of Europe's temporary rescue fund, while German lawmakers vote on the fund's expansion tomorrow. The euro rose against the dollar after the European Commission refuted reports that some Euro-Zone nations are pushing for private Greek bondholders to accept larger writedowns, saying the commission is unaware of discussions among Euro-Zone finance ministers "related to private-sector involvement." The 3-month dollar Libor rate increased for a 14th day to a 13-month high of 0.36856% as dollar demand remains strong in Europe.
- Asian stocks today closed mixed with Japan up +0.07%, China -1.03%, Australia +0.87%, South Korea -0.65%, India -0.47%. Most Asian stocks advanced after Germany vowed continued support for Greece and on speculation Greece will meet requiremnts for additional aid. China's stocks fell to a 14-1/2 month low on concern government measures to tame inflation and a faltering global economy will hurt earnings growth. Chinese property developers fell amid speculation funding costs will rise at the same time as sales slow, while railway stocks declined on specualtion the governemnt will slow rail expansion after a train collision in Shanghai's metro injured 271 people. The Chinese yuan rose against the dollar after the PBOC set its daily reference rate at 6.3623 per dollar, the strongest level in 6 years, which signals policy makers may favor currency gains as a means of taming inflation.
- December S&Ps this morning are trading up +9.50 points. The US stock market yesterday settled higher for a third day on speculation Europe will boost efforts to stem its debt crisis: Dow Jones +1.33, S&P 500 +1.07, Nasdaq Composite +1.20%. Bullish factors included (1) carry-over support from a rally in European stocks after German Chancellor Merkel said Germany will provide all the help it can to stabilize Greece, which temporarily eases European sovereign-debt concerns, (2) strength in homebuilders after the smaller-than-expected decline in home prices in the Jul S&P/CaseShiller composite-20 home price index (-4.1% y/y versus expectations of -4.4% y/y), (3) the unexpected increase in the Sep Richmond Fed manufacturing index (+4 to -6 versus expectations of -1 to -11), and (4) a rally in energy and raw material producers after commodity prices surged.
- Bearish factors included (1) the smaller-than-expected increase in Sep U.S. consumer confidence (+0.2 to 45.4 versus expectations of +1.5 to 46.0), (2) comments from Atlanta Fed President Lockhart who said the European debt crisis poses the biggest economic threat to the U.S. and that the Fed program announced last week to buy more long-term securities will probably give no more than a slight boost to the economy, and (3) a late-day pull back after the Financial Times reported that as many as 7 of the 17 nations using the euro think private creditors should absorb larger losses on their Greek debt holdings, a division that may threaten an agreement with private investors made in July.
- December 10-year T-notes this morning are up +7 ticks. T-note prices yesterday dropped to a 1-week low and settled lower for a third day on supply pressures along with reduced safe-haven demand on optimism European leaders will take the necessary steps to resolve the region's debt crisis: TYZ11 -25, FVZ11 -9.5, EDH12 -2.0. Bearish factors included (1) reduced safe-haven demand for Treasuries as global stock markets surged on heightened optimism that European leaders will resolve the region's debt crisis after German Chancellor Merkel said Germany will provide all the help it can to stabilize Greece, (2) the smaller-than-expected decline in home prices in the Jul S&P/CaseShiller composite-20 home price index (-4.1% y/y versus expectations of -4.4% y/y), (3) the unexpected increase in the Sep Richmond Fed manufacturing index (+4 to -6 versus expectations of -1 to -11), and (4) supply pressures ahead of the Treasury's $35 billion auction of 5-year T-notes on Wed. Bullish factors included (1) the smaller-than-expected increase in Sep U.S. consumer confidence (+0.2 to 45.4 versus expectations of +1.5 to 46.0) and (2) strong demand for the Treasury's $35 billion auction of 2-year T-notes that had a bid-to-cover ratio of 3.76, the highest in a year and higher than the average of the last 12 auctions of 3.35.
- The dollar index this morning is weaker with the dollar/yen -0.42 yen and the euro/dollar +0.71 cents. The dollar index yesterday settled lower on reduced safe-haven demand as global stock markets and the euro gained on optimism European leaders are close to an agreement to contain the region's debt crisis: Dollar Index -0.857, USDJPY +0.453, EURUSD +0.00527. Bearish factors included (1) reduced safe-haven demand for the dollar after stocks and the euro rallied on optimism that European leaders will come up with a resolution to the European debt crisis, and (2) the weaker-than-expected Sep U.S. consumer confidence, which is dollar negative. Bullish factors included (1) weakness in the yen after Japanese Finance Minister Azumi said Japan "is ready" to take bold action on the stronger yen if needed and (2) the increase in the 3-month dollar Libor rate for the 13th consecutive day up to a 13-month high of 0.36522%, a sign of strong European demand for dollars.
- Nov crude oil prices this morning are down -10 cents a barrel and Nov gasoline is -0.35 of a cent per gallon. Crude oil and gasoline prices yesterday rallied sharply and settled higher for a second day as the dollar weakened and on optimism that European leaders will resolve the region's debt crisis: CLX11 +$4.21, RBX11 +10.76. Bullish factors included (1) dollar weakness and (2) strength in global equity markets which boosts confidence in the economic outlook and energy demand on speculation that European leaders will take the necessary steps to resolve the region's debt crisis. Bearish factors included (1) the weaker-than-expected Sep U.S. consumer confidence, which may keep consumer spending and fuel demand constrained and (2) the outlook for increased supplies when the DOE releases its weekly inventory figures on Wed. Expectations for Wednesday's weekly DOE inventories are for crude oil supplies to rise +2.2 million bbl, gasoline stockpiles to increase +900,000 bbl, distillate inventories to remain unchanged and the refinery utilization rate to fall -0.6 to 87.7%.
Global Financial Calendar
| Wednesday 9/28/11 | |
|---|---|
| United States | |
| 0240 ET | Boston Fed President Eric Rosengren addresses the Swedbank Economic Outlook Seminar in Stockholm. |
| 0700 ET | Weekly MBA mortgage applications, previous +0.6% with purchase mortgage sub-index -4.7% and refinancing sub-index +2.2%. |
| 0830 ET | Aug durable goods orders expected -0.2% and -0.2% ex transportation, Jul +4.1% and +0.8% ex transportation. |
| 1300 ET | Treasury auctions $35 billion 5-year T-notes. |
| 1700 ET | Fed Chairman Ben Bernanke speaks on ?Lessons From Emerging Market Economies on the Sources of Sustained Growth? at an event in Cleveland. |
| France | |
| 0130 ET | Revised Q2 French GDP expected no change at unchanged q/q and +1.6% y/y. |
| Germany | |
| 0200 ET | Aug German import price index expected -0.3% m/m and +6.7% y/y, Jul +0.8% m/m and +7.5% y/y. |
| n/a | Sep German CPI (EU harmonized) expected -0.1% m/m and +2.6% y/y, Aug unchanged m/m and +2.5% y/y. |
| Canada | |
| 0900 ET | Jul Canada Teranet/National Bank home price index, Jun +1.7% m/m and +4.5% y/y. |
| Japan | |
| 1950 ET | Aug Japan retail trade expected +0.2% m/m and -0.8% y/y, Jul -0.3% m/m and +0.6% y/y. |
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