Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are weaker with the Euro Stoxx 50 down -0.48% and Mar S&Ps down -6.90 points. The dollar and Treasuries gained as stocks and commodities fell on heightened European sovereign-debt concerns. The euro fell against the dollar after Greece signaled opposition to economic oversight in exchange for aid when Greek Finance Minister Venizelos rejected a report from the Financial Times that Germany proposed a plan to appoint a commissioner to directly intervene in Greek budget decisions as a condition of a 130 billion bailout, citing "national dignity." The euro also weakened after Italy sold 7.5 billion euros of debt due in 2016, 2017, 2021 and 2022 today, below the maximum target of 8 billion euros, while Portugal's 10-year bond yield rose to a euro-era record of 16.09%, which helped push credit-default swaps to insure Portuguese government debt to a record on concern investors will have to take losses on their Portuguese bond holdings in the wake of a Greek debt deal. Jan Euro-Zone economic confidence improved less than expected when it rose +0.6 to 93.4, weaker than expectations of an increase to 93.8. French bank stocks plunged after French President Sarkozy said the country will unilaterally impose a 0.1% tax on financial transactions starting in Aug.
- Asian stocks today closed lower with Japan down -0.54%, China -1.73%, Australia -0.36%, South Korea -1.33%, India -2.15%. Asian stocks fell after Q4 U.S. GDP rose less than expected and Japanese stocks weakened further after the yen rose to a 1-1/2 week high against the dollar, which dims the earnings outlook for exporters. Japanese shipping companies declined after the Nikkei newspaper reported that Japan's three largest shippers may post pretax losses for the year ending March amid plunging cargo rates. Chinese stocks closed lower the first day back from the week-long Lunar holiday after the government refrained from additional easing measures and after the Xinhua News Agency reported that Yin Chengji, spokesman at the Ministry of Human Resources, said China has no plans to invest local pensions in the market "temporarily."
- March S&Ps this morning are trading down -6.90 points. The US stock market on Friday settled mostly lower after the U.S. economy grew less than expected in Q4 and after New York Fed President Dudley said he sees "significant impediments" to the economic recovery this year: Dow Jones -0.58%, S&P 500 -0.16%, Nasdaq Composite +0.40%. Bearish factors on Friday included (1) the weaker-than-expected Q4 U.S. GDP (+2.8% annualized versus expectations of +3.0% annualized) as Q4 personal consumption grew +2.0%, weaker than expectations of +2.4%, (2) comments from New York Fed President Dudley who said the U.S. economy was likely to slow this year as "more contractionary" fiscal policies and the "depressed housing market" were likely to impede economic expansion with the main risk to growth being "uncertainty as to how events in Europe will unfold," and (3) concern the European debt crisis may worsen after credit-default swaps to insure Portuguese government debt rose to a record.
- Bullish factors included (1) the unexpected increase in Jan U.S. University of Michigan consumer confidence to an 11-month high (+1.0 to 75.0 versus expectations of unchanged at 74.0), (2) optimism that a debt-swap agreement between Greece and its private creditors would be resolved after EU Economic and Monetary Affairs Commissioner Rehn said Greek authorities are "very close" to reaching an agreement with its creditors, and (3) decent Q4 earnings results thus far as 66% of the 169 companies in the S&P 500 that reported earnings results since Jan 9 have beaten analysts' estimates.
- March 10-year T-notes this morning are up +10.5 ticks. T-note prices on Friday climbed to a contract high and settled higher after weaker-than-expected Q4 U.S growth added to speculation the Fed will expand asset purchases to spur economic growth: TYH2 +9.0, FVH2 +1.5, EDM2 -0.5. Bullish factors included (1) the weaker-than-expected Q4 U.S. GDP (+2.8% annualized versus expectations of +3.0% annualized), (2) comments from New York Fed President Dudley who said the U.S. economy was likely to slow this year as "more contractionary" fiscal policies and the "depressed housing market" were likely to impede economic expansion with the main risk to growth being "uncertainty as to how events in Europe will unfold," and (3) increased safe-haven demand for Treasuries on concern the European debt crisis may worsen after credit-default swaps to insure Portuguese government debt rose to a record. Bearish factors included (1) the unexpected increase in Jan U.S. University of Michigan consumer confidence to an 11-month high (+1.0 to 75.0 versus expectations of unchanged at 74.0) and (2) hawkish comments from Richmond Fed President Lacker who said he "does not believe economic conditions are likely to warrant an exceptionally low federal funds rate before late 2014" and that interest rates may need to rise before then to prevent an increase in inflation.
- The dollar index this morning is higher with the dollar/yen -0.03 yen and the euro/dollar -1.01 cents. The dollar index on Friday dropped to a 1-1/2 month low and settled lower for a third day after Q4 U.S. GDP expanded at a slower pace than expected and after the euro rose to a 1-1/2 month high against the dollar on speculation Greece was close to reaching agreement with its creditors: Dollar Index -0.493, USDJPY -0.779, EURUSD +0.01094. Bearish factors included (1) the weaker-than-expected Q4 U.S. GDP, (2) comments from EU Economic and Monetary Affairs Commissioner Rehn who said Greek authorities are "very close" to reaching an agreement with its creditors, and (3) a fall in Italian borrowing costs, which is euro supportive, after Italy auctioned 8 billion euros of 182-day bills at a yield of 1.969%, down from 3.251% at a similar auction last month and the lowest in 8 months. Bullish factors Friday included (1) contagion fears from the European debt crisis after credit-default swaps to insure Portuguese government debt rose to a record amid concern Portugal's government may seek to copy a proposed Greek debt deal for private investors to take losses on their bond holdings and (2) the unexpected surge in Jan U.S. University of Michigan consumer confidence to an 11-month high, which is dollar supportive.
- Mar crude oil prices this morning are down -37 cents a barrel and Mar gasoline is -2.74 cents per gallon. Crude oil and gasoline prices on Friday settled mixed after slower-than-expected Q4 U.S. economic growth undercut crude while supply concerns lifted gasoline prices to a 4-3/4 month high: CLH12 -$0.14, RBH12 +7.26. Bullish factors included (1) the decline in the dollar index to a 1-1/2 month low, which boosts investment demand in commodities, (2) the unexpected increase in the final Jan U.S. University of Michigan consumer confidence to an 11-month high, which bolsters the outlook for the U.S. economy and energy demand, and (3) gasoline supply concerns after a 340,000 barrel-a-day Royal Dutch Shell refinery in Texas was shut because of a "temporary upset" and a 380,900 barrel-a-day Conoco Phillips refinery in Illinois was shut for repairs, which adds to the recent shutdown of Pennsylvania refineries by Sunoco and ConocoPhillips and the closure of the St. Croiz refinery by Hovensa LLC. Bearish factors included (1) the smaller-than-expected increase in Q4 U.S. GDP, which indicates reduced energy demand and (2) concerns the European debt crisis may worsen and crimp economic growth and fuel demand after credit-default swaps to insure Portuguese government debt rose to a record.
Global Financial Calendar
| Monday 1/30/12 | |
|---|---|
| United States | |
| 0830 ET | Dec personal spending expected +0.1%, Nov +0.1%. Dec personal income expected +0.4%, Nov +0.1%. Dec PCE deflator expected +2.3% y/y, Nov +2.5% y/y. Dec PCE core deflator expected +0.1% m/m and +1.7% y/y, Nov +0.1% m/m and +1.7% y/y. |
| 1130 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| Euro-Zone | |
| 0500 ET | Jan Euro-Zone business climate indicator expected +0.06 to -0.25, Dec +0.11 to -0.31. |
| 0500 ET | Jan Euro-Zone economic confidence expected +0.5 to 93.8, Dec -0.5 to 93.3. |
| 0500 ET | Revised Jan Euro-Zone consumer confidence, expected no change at -20.6. |
| 0900 ET | EU leaders hold a summit meeting in Brussels. |
| 1200 ET | ECB Council member Ewald Nowotny speaks about European monetary policy at an event in Berlin. |
| Germany | |
| n/a | Jan German CPI (EU harmonized) expected -0.4% m/m and +2.4% y/y. |
| Japan | |
| 1815 ET | Jan Japan Markit/JMMA manufacturing PMI, Dec +1.1 to 50.2. |
| 1830 ET | Dec Japan overall household spending expected -0.1% y/y, Nov -3.2% y/y. |
| 1830 ET | Dec Japan jobless rate expected unchanged at 4.5%, Nov unchanged at 4.5%. Dec job-to-applicant ratio expected 0.70, Nov 0.69. |
| 1850 ET | Dec Japan industrial production expected +2.9% m/m and -5.0% y/y, Nov -2.7% m/m and -4.2% y/y. |
| 2300 ET | Dec Japan vehicle production, Nov +4.5% y/y. |
| United Kingdom | |
| 1901 ET | Jan U.K. GfK consumer confidence survey expected +1 to -32, Dec -2 to -33. |
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