Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are mostly lower with the Euro Stoxx 50 down -0.30% and Mar S&Ps down -9.60 points. The dollar index surged to a 2-week high while stocks and commodities fell, with copper at a 1-week low, after Moody's Investors Service said it will review the credit ratings of all Euro-Zone countries in Q1 following last week's debt summit, saying the summit failed to deliver "decisive policy measures" to end the debt crisis. Bundesbank President Weidmann dampened speculation the ECB will provide additional measures to stem the debt crisis when he said that while last week's new accord represents "progress," the onus is on governments rather than the ECB to resolve the crisis. European and U.S. stocks were also pressured on global growth concerns after China's export growth in Nov slowed to its weakest pace in nearly 2 years. Stocks pared some of their losses after Italy sold 7 billion euros of 1-year bills, the maximum for the auction, at 5.952%, lower than the 6.097% at a similar auction last month.
- Asian stocks today closed mixed with Japan up +1.37%, China -1.03%, Australia +1.18%, South Korea +1.48%, India -2.12%. Japanese stocks finished higher as exporters gained when the yen weakened against the dollar and after U.S. consumer confidence rose to a 6-month high, which boosts earnings prospects of export companies. China's Shanghai Stock Index tumbled to a 2-1/2 year low on weak exports and after the government pledged to keep property curbs next year. Nov China exports climbed +13.8% y/y, stronger than expectations of +10.9% y/y, but still the slowest pace of growth in nearly 2 years. Chinese property developers and builders closed lower after Hu Jintao, President of the 25-member Communist Party Politburo that overseas policy making, said China will maintain its "unswerving stance" on property market regulation next year to return housing prices to a "reasonable level." India's stocks finished lower and the rupee weakened against most currencies after Oct India industrial production sank -5.1% y/y, weaker than expectations of -0.7% y/y and its first contraction in 28 months.
- March S&Ps this morning are trading down -9.60 points. The US stock market last Friday moved higher and maintained its gains after European leaders took steps to stem the regions debt crisis and after U.S. consumer confidence rose more than expected: Dow Jones +1.55%, S&P 500 +1.69%, Nasdaq Composite +1.94%. Bullish factors included (1) a rally in financial stocks after European debt concerns eased when EU leaders at a summit in Brussels agreed to add 200 billion euros to their bailout arsenal, speed up the start of the rescue fund and tighten rules to curb future debts, (2) the narrower than expected U.S. trade balance which fell to its lowest deficit this year and is positive for Q4 GDP growth (-$43.5 billion versus expectations of -$44.0 billion), and (3) the larger-than-expected increase in the Dec U.S. University of Michigan consumer confidence to a 6-month high (+3.6 to 67.7 versus expectations of +1.7 to 65.8).
- Bearish factors included (1) concerns over a global economic slowdown after Oct German exports fell more than expected and Nov China industrial production expanded by the smallest amount in 2 years and (2) concern the European debt crisis may worsen after Moody's Investors Service downgraded the three largest banks in France.
- Goldman Sachs Group (GS) fell 2% and Bank of America (BAC) dropped 2.1% in European trading an carry-over weakness from a fall in European bank stocks.
- March 10-year T-notes this morning are up +7 ticks. T-note prices last Friday retreated from a 2-week high and settled lower after European leaders took steps to alleviate the region's debt crisis and after U.S. consumer confidence rose to a 6-month high: TYH2 -17, FVH2 -5.7, EDM2 -0.5. Bearish factors included (1) reduced safe-haven demand for Treasuries as European debt concerns eased after EU leaders agreed to add 200 billion euros to their bailout arsenal, speed up the start of the rescue fund and tighten rules to curb future debts, (2) the smaller than expected Oct U.S. trade balance which narrowed to its lowest deficit this year and is positive for Q4 GDP growth (-$43.5 billion versus expectations of -$44.0 billion), and (3) the larger-than-expected increase in the Dec U.S. University of Michigan consumer confidence to a 6-month high (+3.6 to 67.7 versus expectations of +1.7 to 65.8). Bullish factors included (1) concerns over a global economic slowdown after Oct German exports fell more than expected and Nov China industrial production expanded by the smallest amount in 2 years and (2) increased safe-haven demand for Treasuries after Moody's Investors Service downgraded the three largest banks in France, a sign the European debt crisis may worsen.
- The dollar index this morning is stronger and at a 1-1/2 week high with the dollar/yen +0.15 yen and the euro/dollar -1.21 cents. The dollar index last Friday fell back from a 1-week high and settled lower on reduced safe-haven demand after European leaders took steps to stem the region's debt crisis and after U.S. consumer confidence rose to a 6-month high: Dollar Index -0.200, USDJPY -0.018, EURUSD +0.00448. Bearish factors for the dollar included (1) euro strength after European leaders agreed to add 200 billion euros to their bailout arsenal and to tighten rules to curb future debts, which eased concern the European debt crisis will worsen and (2) the jump in the Dec U.S. University of Michigan consumer confidence to a 6-month high, which boosted stocks and reduced the safe-haven demand for the dollar. Bullish factors included (1) the larger-than-expected decline in Oct German exports, which is euro negative, (2) the smaller than expected Oct U.S. trade balance, which is positive for Q4 U.S. GDP and dollar positive, and (3) increased safe-haven demand for the dollar after Moody's Investors Service downgraded the three largest banks in France, a sign the European debt crisis may worsen.
- Jan crude oil prices this morning are down -$1.16 a barrel and Jan gasoline is -0.86 of a cent per gallon. Crude oil and gasoline prices last Friday rebounded from 1-week lows and settled higher after U.S. consumer confidence rose to a 6-month high and European leaders agreed to boost their rescue fund and tighten budget rules: CLF12 +$1.07, RBF12 +2.95. Bullish factors included (1) the weaker dollar, which encourages investment demand in commodities, (2) the actions by European leaders to add 200 billion euros to their bailout arsenal and to tighten rules to curb future debts, which eases concern the European debt crisis will worsen and cripple the economy and energy demand, and (3) the larger-than-expected rise in Dec U.S. University of Michigan consumer confidence, which is positive for economic growth and fuel demand. Bearish factors included (1) concerns over a global economic slowdown after Oct German exports fell more than expected and Nov China industrial production expanded by the smallest amount in 2 years and (2) the action by Moody's Investors Service to downgrade the three largest banks in France, a sign the European debt crisis may worsen and slow economic growth and energy demand.
Global Financial Calendar
| Monday 12/12/11 | |
|---|---|
| United States | |
| 1130 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| 1300 ET | Treasury auctions $32 billion 3-year T-notes. |
| 1400 ET | Nov monthly budget statement expected -$140.0 billion, Oct -$98.5 billion. |
| Japan | |
| 0000 ET | Nov Japan consumer confidence expected -0.3 to 38.3, Oct unchanged at 38.6. |
| 0100 ET | Nov Japan machine tool orders, Oct +26.0% y/y. |
| 1850 ET | Oct Japan tertiary industry index expected +0.4%, Sep -0.7%. |
| 2000 ET | Q1 Japan manpower survey, Q4 +10.0. |
| Germany | |
| 0200 ET | Nov German wholesale price index, Oct -1.0% m/m and +5.0% y/y. |
| France | |
| 0245 ET | Oct French current account balance, Sep -4.0 billion euros. |
| 0245 ET | Revised Q3 French wages, previous +0.4% q/q. |
| United Kingdom | |
| 1901 ET | Nov U.K. RICS house price balance expected -25%, Oct -24%. |
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