Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are trading mixed with the Euro Stoxx 50 up +1.03% and Sep S&Ps down -5.20 points. The dollar and Treasuries are higher after the International Accounting Standards Board said some European banks haven't sufficiently written down the value of Greek government bonds and other "distressed sovereign debt" they own. The euro slid against the dollar after business and economic confidence declined in the Euro-Zone. The Aug Euro-Zone economic confidence fell -4.7 to 98.3, weaker than expectations of -3.0 to 100.2 and its lowest lower in 17 months, while the Aug Euro-Zone business climate indicator dropped to 0.07, also weaker than expectations of a decline to 0.10 and its lowest level in 17 months. European bank demand for dollars remains strong as the 3-month dollar Libor rate rose for the 25th consecutive day to a 1-year high of 0.32556%.
- Asian stocks today closed mixed with Japan up +1.16%, China -0.39%, Australia +0.14%, South Korea +0.79%, India +1.59%. Asian stocks received a boost after U.S. personal spending rose more than expected, which may keep demand strong for Asian exports. Japanese stocks closed higher, led by gains in makers of consumer electronics, after the Yomiuri newspaper reported that Sony will form a joint venture with Toshiba and Hitachi that will become the world's biggest manufacturer of liquid-crystal displays. Gains in Japanese stocks were limited after the Jul Japan jobless rate unexpectedly rose +0.1 to 4.7% and Jul Japan retail sales unexpectedly fell -0.3% m/m, weaker than expectations for a +0.5% m/m increase. Stocks in India closed higher after Q2 India GDP rose 7.7% y/y, stronger than expectations of 7.6% y/y. The yuan rose to 6.3705 per dollar, the strongest in 17 years, on speculation the PBOC will allow currency gains to thwart inflation after the National Development and reform Commission said China's overall price level may remain high as global liquidity and imported inflation make it more difficult for the government to meet its aim of containing consumer-price gains within 4% this year.
- September S&Ps this morning are trading down -5.20 points. The US stock market yesterday rallied sharply after damage estimates from Hurricane Irene were reduced along with optimism the U.S. recovery will continue after Jul personal spending rose more than expected: Dow Jones +2.216, S&P 500 +2.83%, Nasdaq Composite +3.32%. The S&P 500, the Dow and the Nasdaq all posted 3-week highs. Bullish factors included (1) a rally in insurance stocks after Kinetic Analysis, a firm that predicts disaster effects, said Hurricane Irene caused about $2.6 billion of damage, down from estimates as high as $14 billion last week, (2) the larger-than-expected increase in Jul personal spending which posted its biggest gain in 5 months and bolsters optimism in the economic outlook (+0.8% versus expectations of +0.5%), and (3) strength in raw material and energy producers as a weaker dollar and confidence in continued global economic growth prompted a broad-based rally in most commodities.
- Bearish factors included (1) the ongoing slump in the U.S. housing market after Jul U.S. pending home sales fell more than expected (-1.3% m/m versus expectations of -0.5% m/m), (2) heightened European debt concerns after EU Economic and Monetary Affairs Commissioner Rehn said he's "seriously concerned" that financial turbulence could spill over into the broader economy and that the EU may cut its growth forecasts next month, and (3) the action by the IMF to cut its 2011 US GDP forecast to 1.6% from a 2.5% forecast made in June and to lower its 2012 US GDP forecast to 2.0% from 2.7%.
- September 10-year T-notes this morning are up +11 ticks. T-note prices yesterday settled lower after Jul U.S. personal spending rose more than expected and a strong rally in stocks reduced the safe-haven demand for Treasuries: TYU11 -18, FVU11 -7, EDZ11 +1.0. Bearish factors included (1) the larger-than-expected increase in Jul personal spending which posted its biggest gain in 5 months (+0.8% versus expectations of +0.5%), (2) the bigger-than-expected increase in the Jul PCE deflator which rose at its fastest pace in 2-3/4 years (+2.8% y/y versus expectations of +2.7% y/y), (3) the larger-than-expected increase in the Jul PCE core deflator which climbed to a 1-year high (+1.6% y/y versus expectations of +1.4% y/y), and (4) reduced safe-haven demand for Treasuries after the S&P 500 rose to a 3-week high. Bullish factors included (1) the larger-than-expected decline in Jul U.S. pending home sales (-1.3% m/m versus expectations of -0.5% m/m), (2) the action by the IMF to cut its 2011 US GDP forecast to 1.6% from a 2.5% forecast made in June and to lower its 2012 US GDP forecast to 2.0% from 2.7%, and (3) increased safe-haven demand for Treasuries after EU Economic and Monetary Affairs Commissioner Rehn said he's "seriously concerned" that financial turbulence could spill over into the broader economy and that the EU may cut its growth forecasts next month.
- The dollar index this morning is higher with the dollar/yen +0.05 yen and the euro/dollar -1.11 cents. The dollar index yesterday fell to a 1-1/2 week low on reduced safe-haven demand after global stock and commodity markets rallied on speculation the global economic recovery will continue: Dollar Index -0.093, USDJPY +0.390, EURUSD +0.00252. Bearish factors included (1) the jump in the S&P 500 to a 3-week high, which reduced the safe-haven demand for the dollar and (2) the action by the IMF to cut its 2011 US GDP forecast to 1.6% from a 2.5% forecast made in June and to lower its 2012 US GDP forecast to 2.0% from 2.7%. Bullish factors for the dollar included (1) weakness in the yen after Japanese Finance Minister Noda was chosen to succeed Prime Minister Kan, which should ensure a continuation of Japan's policies against an appreciating yen and (2) euro negative comments from ECB President Trichet who said risks to the inflation outlook in the Euro-Zone are "under study," which is less hawkish than his statement earlier this month that risks to the inflation outlook were "on the upside," and may signal an end to ECB tightening measures and a shift in policy to a more dovish stance.
- Oct crude oil prices this morning are down -22 cents a barrel and Oct gasoline is +0.95 of a cent per gallon. Crude oil and gasoline prices yesterday finished mixed as stronger-than-expected Jul U.S. personal spending and stock market strength boosted crude while the lack of damage done to East Coast refineries from Hurricane Irene undercut gasoline: CLV11 +$1.90, RBV11 -1.65. Oct crude posted a 1-week high and Oct gasoline jumped to a 3-week high but shed its gains and closed lower. Bullish factors included (1) the slide in the dollar index to a 1-1/2 week low, which boosts investment demand for commodities, (2) the larger-than-expected increase in Jul U.S. personal spending which posted its biggest gain in 5-months and eases concern over an economic slowdown, and (3) the rally in the S&P 500 to a 3-week high, which lifts confidence in the economic outlook and energy demand. Bearish factors included (1) the larger-than-expected decline in Jul U.S. pending home sales, which signals continued weakness in the housing market that may curb economic expansion and fuel demand, and (2) the resumption of normal operations to most East Coast refineries after Hurricane Irene spared most refiners from any major damage.
Global Financial Calendar
| Tuesday 8/30/11 | |
|---|---|
| United States | |
| 0745 ET | ICSC (Int?l Council of Shopping Centers) weekly retailer sales. |
| 0800 ET | Chicago Fed President Charles Evans speaks to CNBC in a live interview. |
| 0855 ET | Redbook weekly retailer sales. |
| 0900 ET | Jun S&P/CaseShiller composite-20 home price index expected unchanged m/m and -4.5% y/y, May -0.1% m/m and -4.5% y/y. |
| 0900 ET | Q2 S&P/CaseShiller home price index expected -8.3% y/y, Q1 -5.1% y/y. |
| 1000 ET | Aug consumer confidence expected -7.5 to 52.0, Jul +1.9 to 59.5. |
| 1130 ET | Weekly 4-week T-bill auction. |
| 1215 ET | Minneapolis Fed President Narayana Kocherlakota speaks on ?Economic Outlook and a Reconsideration of Leverage Incentives? at he North Dakota National Association of State Treasurers. |
| 1400 ET | Minutes of the Aug 9 FOMC meeting. |
| United Kingdom | |
| 0430 ET | Jul U.K. net consumer credit expected +0.4 billion pounds, Jun +0.4 billion pounds. |
| 0430 ET | Jul U.K. mortgage approvals expected 49,000, Jun 48,400. |
| 0430 ET | Jul U.K. M4 money supply, Jun -0.5% m/m and -0.7% y/y. |
| 1901 ET | Aug U.K. GfK consumer confidence survey expected -3 to -33, Jul -5 to -30. |
| Euro-Zone | |
| 0500 ET | Aug Euro-Zone economic confidence expected -3.0 to100.2, Jul -2.2 to 103.2. |
| 0500 ET | Aug Euro-Zone business climate indicator expected 0.10, Jul 0.45. |
| Canada | |
| 0830 ET | Jul Canada industrial product prices expected -0.2% m/m, Jun -0.3% m/m. |
| 0830 ET | Jul Canada raw materials price index expected -0.1% m/m, Jun -2.2% m/m. |
| Japan | |
| 1915 ET | Aug Japan Markit/JMMA manufacturing PMI, Jul +1.4 to 52.1. |
| 1950 ET | Jul Japan industrial production expected +1.4% m/m and -1.9% y/y, Jun +3.8% m/m and -1.7% y/y |
| 2130 ET | Jul Japan labor cash earnings expected -0.5% y/y, Jun -0.7% y/y. |
