Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are trading mostly higher with the Euro Stoxx 50 up +0.84% and Sep S&Ps unchanged. As expected the BOE maintained its benchmark interest rate at 0.50% and held its asset purchase target at 200 billion pounds. The euro weakened and Treasuries and the dollar gained after the yield on the Greek 2-year note climbed for a fifth day to a record 55.764%. European bank stocks gained and led a rally in the broader market on speculation that ECB President Trichet may announce additional support measures today for financial markets. Gains in U.S. stock futures were limited after the OECD slashed its growth forecasts for the U.S. in Q3 to 1.1% from a May forecast of 2.9% and cut its Q4 U.S. growth forecast to 0.4% from 3.0% in May. The Aug Bank of France business sentiment unexpectedly held at a 22-month low of 98, stronger than expectations of a 1 pt decline to 97. German exports unexpectedly declined for a second month as they fell -1.8% in Jul, weaker than expectations of a +0.5% increase and indicates that Europe's largest economy is losing momentum.
- Asian stocks today closed mostly higher with Japan up +0.34%, China -0.83%, Australia +0.11%, South Korea +1.00%, India +0.59%. Asian exporters were supported by speculation that Fed Chairman Bernanke will today signal that policy makers will consider further stimulus measures to spur the economy. Limiting gains in Japanese stocks was the fall in Jul Japan machine orders by -8.2% m/m, much weaker than expectations of -4.2% m/m and the biggest decline in 10 months. China's Shanghai Stock Index closed lower for the 5th time in the last 6 days after the Securities Times reported the government may raise interest rates again this month or next. EU Chamber of Commerce President Cucino said that Chinese officials told EU business executives that the yuan will achieve "full convertibility" by 2015. The PBOC now fixes a reference rate for the yuan and limits daily gains or losses to 0.5% from that level. China also limits conversion for investment purposes and has amassed record foreign-exchange reserves of $3.2 trillion by selling yuan to curb its appreciation.
- September S&Ps this morning are trading unchanged. The US stock market yesterday opened higher and rallied throughout the day to finish on its high on reduced European debt concerns along with speculation that President Obama's plan to inject $300 billion into the economy will bolster growth: Dow Jones +2.47, S&P 500 +2.86%, Nasdaq Composite +3.04%. Bullish factors included (1) reduced European debt concerns after Germany's top court supported German participation in European rescue funds, which may aid German Chancellor Merkel's efforts to gain support for participation in a new round of EFSF programs, (2) speculation that President Obama's plan to inject $300 billion into the economy through tax cuts, infrastructure spending and direct aid to state and local governments will bolster the U.S. economy, and (3) comments from Chicago Fed President Evans who said the Fed should move "aggressively" to push the unemployment rate to around 7.5%, which indicates he favors additional Fed stimulus.
- Bearish factors included (1) concern the ongoing European sovereign-debt crisis is slowing growth after the IMF cut its forecast for 2011 Euro-Zone economic growth to 1.7% from an Aug forecast of 1.9% and (2) the Fed's Beige Book in which 7 of the Fed's 12 regions offered more downbeat views of business conditions than in last month's survey and that some Fed districts noted "mixed or weakening activity" as shoppers limited their spending and factories curbed production.
- VeriFone Systems (PAY) climbed 5.3% in European trading after S&P said the company will replace Timberland in the S&P Midcap 400 on Sep 13.
- December 10-year T-notes this morning are up +8.5 ticks. T-note prices closed lower on reduced safe-haven demand as the stock market rallied along with speculation President Obama?s plan for more than $300 billion in economic stimulus will boost growth: TYZ11 -11, FVZ11 -4, EDH12 +0.5. Bearish factors included (1) reduced safe-haven demand as the equity market rallied along with an easing of European debt concerns after Germany's top court supported German participation in European rescue funds and (2) speculation that President Obama's plan to inject $300 billion into the economy to bolster growth will increase inflation expectations. Bullish factors included (1) comments from Chicago Fed President Evans who said the Fed should move "aggressively" to push the unemployment rate to around 7.5%, which indicates he favors additional Fed stimulus, (2) the prediction from CRT Capital Group LLC that the Fed may buy $520 billion of longer-maturity Treasuries while selling shorter-term debt, which may push the 10-year T-note yield to as low as 1.60%, and (3) the Fed's Beige Book in which 7 of the Fed's 12 regions offered more downbeat views of business conditions than in last month's survey and said there was "mixed or weakening activity" as shoppers limited their spending and factories curbed production, which may prompt the Fed into additional stimulus measures.
- The dollar index this morning is stronger with the dollar/yen -0.08 yen and the euro/dollar -0.38 cents. The dollar index yesterday settled lower after the euro strengthened when Germany's top court rejected constitutional challenges to the nation's participation in European rescue funds: Dollar Index -0.485, USDJPY -0.413, EURUSD +0.01002. Bearish factors included (1) reduced European debt concerns as the ruling by Germany's top court in favor of Germany's participation in European rescue funds will aid German Chancellor Merkel's efforts to gain support for participation in a new round of EFSF programs, (2) dollar negative comments from Chicago Fed President Evans who said the Fed should move "aggressively" to reduce unemployment, even at the cost of temporarily pushing inflation higher, and (3) reduced safe-haven demand for the dollar as the equity market rallied. Bullish factors included (1) the surge in the yield on the Greek 2-year note to a record 53.27%, which boosted the safe-haven demand for the dollar and (2) the action by the IMF to cut its forecast for 2011 Euro-Zone economic growth to 1.7% from an Aug forecast of 1.9%.
- Oct crude oil prices this morning are down -10 cents a barrel and Oct gasoline is -1.66 cents per gallon. Crude oil and gasoline prices yesterday moved higher as the dollar weakened and as a weather system in the Gulf of Mexico threatens U.S. crude production and refinery output: CLV11 +$3.32, RBV11 +8.54. Bullish factors included (1) the weaker dollar, which encourages investment demand in commodities, (2) the possibility that a weather disturbance in Mexico's Bay of Campeche may strengthen and pose a threat to U.S. crude and refinery output in the Gulf of Mexico, (3) the prediction from Bank of America that it may take Libya at least 18 months to restore crude production to pre-war levels because of delays in establishing political stability and the advanced age of the country's oilfields, and (3) the rally in the equity market, which bolsters confidence in the economic outlook and energy demand. Expectations for Thursday's weekly DOE inventory report (delayed 1 day due to the Labor Day holiday) are for crude oil supplies to fall -2.0 million bbl, gasoline stockpiles to decline by -1.45 million bbl, distillate inventories to remain unchanged and the refinery capacity rate to fall -1.0 to 88.2%.
Global Financial Calendar
| Thursday 9/8/11 | |
|---|---|
| United States | |
| 0830 ET | Weekly initial unemployment claims expected -4,000 to 405,000, previous -12,000 to 409,000. Weekly continuing claims expected -29,000 to 3.706 million, previous -18,000 to 3.735 million. |
| 0830 ET | Jul trade balance expected -$51.0 billion, Jun -$53.10 billion. |
| 1100 ET | Treasury announces amounts of 3-year T-notes (previous $32 billion), 10-year T-notes (previous $24 billion) and 30-year T-bonds (previous $16 billion) to be auctioned Sep 12-14. |
| 1300 ET | Fed Chairman Ben Bernanke speaks to the Economics Club of Minnesota. |
| 1500 ET | Jul consumer credit expected +$6.000 billion, Jun +$15.532 billion. |
| 1630 ET | Weekly money supply report and Fed balance sheet. |
| Japan | |
| 0030 ET | Aug Japan bankruptcies, Jul +1.4% y/y. |
| 0100 ET | Aug Japan eco watchers survey current, Jul 52.6. Aug eco watchers survey outlook, Jul 48.5. |
| 1950 ET | Revised Q2 Japan GDP expected -0.5% q/q and -2.0% annualized, previous -0.3% q/q and -1.3% annualized. |
| France | |
| 0130 ET | Revised Q2 French non-farm payrolls expected no change at +0.4% q/q. |
| 0320 ET | Aug Bank of France business sentiment expected -1 to 97, Jul -1 to 98. |
| Germany | |
| 0200 ET | Jul German trade balance expected +11.5 billion euros, Jun +12.7 billion euros. Jul exports expected +0.5%, Jun -1.2%. Jul imports expected +0.3%, Jun +0.3%. |
| United Kingdom | |
| 0700 ET | BOE announces interest decision and asset purchase target (expected no change to the 0.0% 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 1.50% 2-week refinancing rate). |
| 0830 ET | ECB President Jean-Claude Trichet speaks at monthly press conference. |
| Canada | |
| 0830 ET | Jul Canada building permits, Jun +2.1%m/m. |
| 0830 ET | Jul Canada new housing price index, Jun +0.3% m/m and +2.1% y/y. |
| CHI | |
| 2200 ET | Aug China CPI expected +6.2% y/y, Jul +6.5% y/y. |
| 2200 ET | Aug China PPI expected +7.2% y/y, Jul +7.5% y/y. |
| 2200 ET | Aug China industrial production expected +13.7% y/y, Jul +14.0% y/y |
| 2200 ET | Aug China retail sales expected +17.0% y/y, Jul +17.6% y/y. |
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