Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are higher with the Euro Stoxx 50 up +0.05% at a 6-month high and Mar S&Ps up +0.80 of a point at a 9-month high. Treasuries weakened and the dollar index fell to a fresh 1-3/4 month low, while commodities rose with crude oil at a 1-week high, on optimism Greek leaders will find a resolution to their debt-swap talks with creditors. Greek Prime Minister Papademos held an unscheduled meeting with the troika to put the final touches on terms required for the country's 130 billion-euro rescue package and also held "constructive" talks with the head of the IIF which has negotiated the terms of a debt-swap deal with private bondholders. The cost of insuring against a default on European government bonds fell as the Markit iTraxx SovX Western Index of credit-default swaps declined -2 bp to 316, a 3-1/4 month low. The euro climbed to a 1-3/4 month high against the dollar after the EU Commission said it's "not ready to contemplate" Greece leaving the Euro-Zone. Limiting gains in stocks and the euro was the -4.3% m/m decline in Dec German exports, a larger drop than expectations of -1.0% m/m and the biggest fall in nearly 3 years.
- Asian stocks today closed higher with Japan up +1.10%, China +2.86%, Australia +0.39%, South Korea +1.21%, India +0.48%. Japan's Nikkei 225 Stock Index rallied to a 3-month high as exporters gained when the yen tumbled to a 1-1/2 week low against the dollar and after Toyota, Japan's biggest company by revenue, raised its forecast for full-year net income by 11% to 200 billion yen ($2.6 billion) on a sales rebound in the U.S. The yen weakened to a 1-1/2 week low against the dollar after Japan's 2011 current-account surplus shrank -44% from 2010 to 9.63 trillion yen ($125 billion), the lowest in 15 years. China's Shanghai Stock Index rose to a 2-month high as property developers strengthened after the PBOC said that it will ensure that "loan demand from first-home families" is met. Chinese energy producers also rallied after the government raised domestic fuel tariffs for the first time in 10 months.
- March S&Ps this morning are trading little changed, up +0.80 of a point. The US stock market on Tuesday overcame early weakness and settled higher on optimism Greece had made enough progress with creditors to secure international aid and after Dec U.S. job openings rose by the most in 10-months: Dow Jones +0.26%, S&P 500 +0.20%, Nasdaq Composite +0.07%. The S&P 500 posted a 7-month high, the Dow climbed to a 3-1/2 year high and the Nasdaq surged to a 10-3/4 year high. Bullish factors Tuesday included (1) carry-over strength from a rally in European stocks on optimism a resolution will finally be found to the Greek debt-swap negotiations after an unnamed Greek official said a final draft of an agreement on budget and structural measures to free up a second aid package was being discussed by Greek political party leaders, (2) data from the U.S. Labor Department that showed Dec U.S. job openings rose +258,000, the biggest monthly gain in 10 months, which shows employers are gaining confidence the economy will keep growing, (3) the +$19.308 billion increase in Dec U.S. consumer credit, stronger than expectations of +$7.000 billion and is positive for spending as it shows consumers more confident to take on additional debt, and (4) a rally in energy and raw-material producers as a fall in the dollar index to a 1-3/4 month low fueled gains in most commodities.
- Bearish factors included (1) comments from Fed Chairman Bernanke who said the drop in the U.S. unemployment rate in Jan to 8.3% understates weakness in the U.S. labor market that is a "long way" from returning to normal, and (2) global economic concerns after Dec German industrial production sank -2.9% m/m, its biggest decline in nearly 3 years, along with the statement from China's Ministry of Industry and Information Technology that said China's industrial output will probably slow this year due to the deepening of the European debt crisis and overall slack international demand.
- March 10-year T-notes this morning are down -4 ticks. T-note prices on Tuesday dropped to a 1-1/2 week low and settled lower after a report that Greek officials are closer to a deal to receive international funding reduced the safe-haven demand for U.S. debt: TYH2 -16.5, FVH2 -7.7, EDM2 -1.5. Bearish factors Tuesday included (1) reduced safe-haven demand for Treasuries as stocks rallied after an unnamed Greek official said a final draft of an agreement on budget and structural measures to free up a second aid package was being discussed by Greek political party leaders, (2) data from the U.S. Labor Department that showed Dec U.S. job openings rose +258,000, the biggest monthly gain in 10 months, which shows employers are gaining confidence the economy will keep growing, and (3) supply pressures ahead of the Treasury's $24 billion 10-year T-note auction on Wednesday. Bullish factors included (1) comments from Fed Chairman Bernanke who said the drop in the U.S. unemployment rate in Jan to 8.3% understates weakness in the U.S. labor market that is a "long way" from returning to normal, which keeps open the chance the Fed announces QE3 to stimulate economic growth and (2) global growth concerns after China's Ministry of Industry and Information Technology said China's industrial output will probably slow this year due to the deepening of the European debt crisis and overall slack international demand.
- The dollar index this morning is weaker and at a fresh 1-3/4 month low with the dollar/yen +0.14 yen and the euro/dollar +0.10 cents. The dollar index on Tuesday erased an early rally and settled lower on optimism Greek officials and international creditors will finally find a resolution to their debt-swap talks along with dollar negative comments from Fed Chairman Bernanke: Dollar Index -0.493, USDJPY +0.213, EURUSD +0.01304. The dollar index posted a 1-3/4 month low and the euro climbed to a 1-3/4 month high. Bearish factors included (1) the rally in the euro to a 1-3/4 month high against the dollar after an unnamed Greek official said a final draft of an agreement on budget and structural measures to free up a second aid package was being discussed by Greek political party leaders, (2) comments from Fed Chairman Bernanke who said "We still have a long way to go before the labor market can be said to be operating normally," which leaves open the chance the Fed may implement additional dollar negative easing measures to stimulate the economy, and (3) the rally in the S&P 500 to a 7-month high, which reduces the safe-haven demand for the dollar. Bullish factors Tuesday included (1) the unexpected -2.9% m/m fall in Dec German industrial production, the biggest monthly decline in nearly 3 years and is negative for the euro and (2) weakness in the yen which fell to a 1-week low against the dollar after Japan's Ministry of Finance said it sold 1.02 trillion yen ($13.2 billion) against the dollar the first 4 days of Nov in unannounced or "stealth" intervention to stem the strength in the yen.
- Mar crude oil prices this morning are up +$1.01 a barrel at a 1-week high and Mar gasoline is +0.83 of a cent per gallon. Crude oil and gasoline prices on Tuesday shook off early losses and settled mixed as a weak dollar boosted crude but the action by the U.S. Energy Department to cut its 2012 forecast for U.S. gasoline demand undercut gasoline: CLH12 +$1.50, RBH12 -0.04. Bullish factors included (1) the plunge in the dollar index to a 1-3/4 month low, which boosts investment demand for commodities, (2) carry-over support from a rally in heating oil to a 9-month high as the extreme cold snap in Europe boosts the prospects for increased U.S. exports of heating fuels, and (3) the rally in the S&P 500 to a 7-month high, which bolsters confidence in the economic outlook and energy demand. Bearish factors included (1) concern that U.S. fuel demand may remain constrained after Fed Chairman Bernanke said the U.S. has "a long way to go before the labor market can be said to be operating normally, (2) the statement from China's Ministry of Industry and Information Technology that said China's industrial output will probably slow this year, which signals reduced energy demand and consumption in the world's second-largest consumer of crude, (3) the action by the U.S. Energy Department to cut its 2012 U.S. gasoline demand forecast to 8.71 million barrels a day, down -30,000 bbl from a Jan projection of 8.74 million barrels a day, and (4) the outlook for U.S. crude supplies to increase when the DOE releases its weekly inventory figures on Wed. Expectations for the weekly DOE inventories are for crude oil supplies to increase +2.5 million bbl, gasoline stockpiles to build by +625,000 bbl, distillate inventories to fall -875,000 bbl and the refinery capacity rate to fall -0.4 to 81.4%.
Global Financial Calendar
| Wednesday 2/8/12 | |
|---|---|
| United States | |
| 0700 ET | Weekly MBA mortgage applications, previous -2.9% with purchase mortgage sub-index -1.7% and refinancing sub-index -3.6%. |
| 1040 ET | San Francisco Fed President John Williams speaks to the Bishop Ranch Forum business leaders group on ?The Federal Reserve and the Economic Recovery.? |
| 1300 ET | Treasury auctions $24 billion 10-year T-notes. |
| Japan | |
| 0000 ET | Jan Japan eco watchers survey current expected 47.4, Dec 47.0. Jan eco watchers survey outlook expected 45.5, Dec 44.4. |
| 1850 ET | Dec Japan machine orders expected -5.0% m/m and +8.5% y/y, Nov +14.8% m/m and +12.5% y/y. |
| Germany | |
| 0200 ET | Dec German trade balance expected +13.7 billion euros, Nov +16.2 billion euros. Dec exports expected -1.0% m/m, Nov +2.5% m/m. Dec imports expected +1.0% m/m, Nov -0.4% m/m. |
| France | |
| 0230 ET | Jan Bank of France business sentiment expected unchanged at 96, Dec +1 to 96. |
| Canada | |
| 0815 ET | Jan Canada housing starts expected +191,500, Dec +199,900. |
| CHI | |
| 2030 ET | Jan China PPI expected +0.7% y/y, Dec +1.7% y/y. |
| 2030 ET | Jan China CPI expected +4.0% y/y, Dec +4.1% y/y. |
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