Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are mixed with the Euro Stoxx 50 up +0.67% and Mar S&Ps up +3.60 points. The dollar and Treasuries are lower and commodities gained as Spanish borrowing costs declined. Spain sold 4.5 billion euros of debt, its maximum target, with the 3-year notes yielding 2.617%, down from 3.332% at a similar auction last month. EU leaders will debate how to increase the region's bailout fund at a 2-day summit starting today in Brussels. European and U.S. stocks received a boost after Feb China PMI manufacturing expanded more than expected, while Feb German PMI was unexpectedly revised up to 50.2 from the originally reported 50.1. The euro fell back to little changed against the dollar after the Feb Euro-Zone CPI estimate unexpectedly accelerated to +2.7% y/y, stronger than expectations of +2.6% y/y, while Jan Euro-Zone unemployment rate unexpectedly rose +0.1 to 10.7%, the highest in 14-1/4 years.
- Asian stocks today closed mostly lower with Japan down -0.16%, China -0.03%, Australia -1.00%, South Korea closed for holiday, India -0.95%. Asian stocks played catch-up with other global stock bourses as they shed early gains and finished lower. Losses in Japanese stocks were limited after Q4 Japan capital spending excluding software unexpectedly rose +4.9% y/y, stronger than expectations of -7.4% y/y and the largest gain in 4-3/4 years. Chinese stocks were little changed as growth in the manufacturing industry for a third straight month overshadowed concern the nation's tight monetary policies will restrict economic expansion. The Feb China manufacturing PMI rose +0.5 to 51.0, stronger than expectations of +0.3 to 50.8 and its best level in 5 months.
- March S&Ps this morning are trading up +3.60 points. The U.S. stock market Wednesday fell back from multi-year highs and closed lower after Fed Chairman Bernanke gave no indication the Fed is considering additional stimulus measures: Dow Jones -0.41%, S&P 500 -0.47%, Nasdaq Composite -0.67%. The S&P 500 and the Dow posted 3-3/4 year highs and the Nasdaq posted an 11-year high, but they all erased their advance and closed lower. Bearish factors Wednesday included (1) testimony to Congress from Fed Chairman Bernanke in which he gave no indication the Fed is considering additional easing measures to spur the economy, (2) weakness in energy and raw material producers after a rebound in the dollar prompted long liquidation in most commodities, and (3) profit-taking in stocks after the S&P 500 rallied nearly 20% in the past 3-months up to Wednesday's 3-3/4 year high.
- Bullish factors included (1) the unexpected upward revision to Q4 U.S. GDP (+3.0 annualized versus expectations of no change at 2.8% annualized), (2) the bigger-than-expected increase in the Feb Chicago PMI which expanded at its fastest pace in 10-months (+3.8 to 64.0 versus expectations of +0.8 to 61.0), (3) comments from Dallas Fed President Fisher who said the risks of a recession have fallen in recent months as the U.S. economy is accelerating as businesses increase hiring, and (4) the upbeat assessment of the economy in the Fed's Beige book that said the U.S. economy expanded at a "modest to moderate pace" in Jan and early Feb, fueled by manufacturers, including automakers.
- June 10-year T-notes this morning are down -10.5 ticks. T-note prices Wednesday closed lower on strong U.S. economic data along with comments from Fed Chairman Bernanke that dampened speculation the Fed will expand its stimulus measures: TYM2 -14.0, FVM2 -7.0, EDU2 +2.5. Bearish factors Tuesday included (1) the unexpected upward revision to Q4 U.S. GDP (+3.0 annualized versus expectations of no change at 2.8% annualized), (2) the bigger-than-expected increase in the Feb Chicago PMI which expanded at its fastest pace in 10-months (+3.8 to 64.0 versus expectations of +0.8 to 61.0), (3) disappointment that Fed Chairman Bernanke failed to hint at QE 3 or any other additional Fed stimulus measures, and (4) comments from Dallas Fed President Fisher who said the risks of a recession have fallen in recent months as the U.S. economy is accelerating as businesses increase hiring. Bullish factors included (1) the Fed's purchase of $1.813 billion of long-term Treasuries as part of its Operation Twist program to replace $400 billion of shorter-maturity Treasuries in its holdings with longer-term debt to cap borrowing costs and (2) increased safe-haven demand for Treasuries as stock prices weakened.
- The dollar index this morning is weaker with the dollar/yen -0.13 yen and the euro/dollar +0.09 cents. The dollar index Wednesday recovered from a 2-3/4 month low and settled higher when the euro weakened after European banks took more ECB 3-year loans than expected and after Fed Chairman Bernanke dampened speculation of further Fed easing: Dollar Index +0.464, USDJPY +0.686, EURUSD -0.01332. Bullish factors included (1) weakness in the euro after the ECB allotted 529.5 billion euros in 3-year funds to European banks, more than estimates of 470 billion euros, (2) the unexpected decline in Jan French consumer spending for a second month, which is euro negative, and (3) comments from Fed Chairman Bernanke who said "We have seen some positive developments in the labor market," which dampened speculation the Fed would increase its dollar negative stimulus measures. Bearish factors included (1) strength in the pound which rallied to a 3-1/2 month high against the dollar after Jan U.K. mortgage approvals climbed +58,728, the most in 2-1/2 years and (2) the statement from the IMF that it backs currency intervention as a valid instrument for central banks to use against excessive volatility in foreign-exchange markets.
- Apr crude oil prices this morning are up +21 cents a barrel and Apr gasoline is +0.88 of a cent per gallon. Crude oil and gasoline prices Wednesday slipped to 1-week lows on dollar strength but recovered their losses and settled higher on signs the U.S. economy is expanding: CLJ12 +$0.52, RBJ +3.25. Bullish factors included (1) the larger-than-expected decline in weekly DOE gasoline stockpiles (-1.60 million bbl versus expectations of -350,000), (2) the unexpected upward revision to Q4 US GDP to 3.0% annualized from 2.8% annualized, which signals increased energy consumption, and (3) the larger-than-expected increase in the Feb Chicago PMI to its best level in 10 months, which signals increased fuel demand. Bearish factors included (1) a rebound in the dollar after the dollar index recovered from a 2-3/4 month low and closed higher, which discourages investment demand in commodities, (2) the larger-than-expected increase in weekly DOE crude stockpiles to their highest in 5 months (+4.16 million bbl to 344.9 million versus expectations of +1.1 million bbl), (3) Fed Chairman Bernanke's testimony to Congress in which he gave no indications of additional Fed stimulus measures, and (4) Bloomberg data that showed Feb OPEC crude output increased by +255,000 barrels to an average of 31.055 million barrels a day, a 3-1/4 year high.
Global Financial Calendar
| Thursday 3/1/12 | |
|---|---|
| United States | |
| 0830 ET | Weekly initial unemployment claims expected +4,000 to 355,000, previous unchanged at 351,000. Weekly continuing claims expected +23,000 to 3.415 million, previous 52,000 to 3.392 million. |
| 0830 ET | Jan personal spending expected +0.4%, Dec unchanged. Jan personal income expected +0.4%, Dec +0.5%. Jan PCE deflator expected +2.3% y/y, Dec +2.4% y/y. Jan PCE core deflator expected +0.2% m/m and +1.9% y/y, Dec +0.2% m/m and +1.8% y/y. |
| 1000 ET | Fed Chairman Ben Bernanke delivers semi-annual monetary policy report to the Senate Banking Committee. |
| 1000 ET | Jan construction spending expected +1.0%, Dec +1.5%. |
| 1000 ET | Feb ISM manufacturing index expected +0.4 to 54.5, Jan +1.0 to 54.1. Feb ISM prices paid sub-index expected +2.5 to 58.0, Jan +8.0 to 55.5. |
| 1030 ET | Feb ICSC chain store sales, Jan +4.8% y/y. |
| 1030 ET | Fed Governor Sarah Bloom Raskin speaks on the economic outlook at the Unitarian Church in Westport, CT. |
| 1230 ET | Atlanta Fed President Dennis Lockhart speaks to the Atlanta Fed?s Banking Outlook Conference on the economy and banking. |
| 1700 ET | Feb total vehicle sales expected 14.00 million, Jan 14.13 million. Feb domestic vehicle sales expected 11.0 million, Jan 11.05 million. |
| 1630 ET | Weekly money supply report and Fed balance sheet. |
| 2330 ET | San Francisco Fed President John Williams speaks at the CFA?s Economic Forecast Dinner in Honolulu, HI. |
| Japan | |
| 0000 ET | Feb Japan vehicle sales, Jan +40.7% y/y. |
| 1830 ET | Jan Japan job-to-applicant ratio expected 0.72, Dec 0.71. Jan jobless rate expected -0.1 to 4.5%, Dec +0.1 to 4.6%. |
| 1830 ET | Jan Japan overall household spending expected -0.9% y/y, Dec +0.5% y/y. |
| 1830 ET | Feb Tokyo CPI expected -0.2% y/y, Jan -0.3% y/y. Feb Tokyo CPI ex-fresh food expected -0.4% y/y, Jan -0.4% y/y. Feb Tokyo CPI ex food & energy expected -1.1% y/y, Jan -1.1% y/y. |
| 1830 ET | Jan Japan national CPI expected -0.1% y/y, Dec -0.2% y/y. Jan national CPI ex-fresh food expected -0.2% y/y, Dec -0.1% y/y. Jan national CPI ex food & energy expected -1.1% y/y, Dec -1.1% y/y. |
| France | |
| 0130 ET | Q4 French ILO mainland unemployment rate expected +0.2 to 9.5%, Q3+0.2 to 9.3%. Q4 mainland unemployment change, Q3 +37,000. |
| 0350 ET | Revised Feb French PMI manufacturing expected no change at 50.2. |
| Germany | |
| 0355 ET | Revised Feb German PMI manufacturing expected no change at 50.1. |
| United Kingdom | |
| 0430 ET | Feb U.K. PMI manufacturing expected -0.1 to 52.0, Jan +2.4 to 52.1. |
| Euro-Zone | |
| 0500 ET | Feb Euro-Zone CPI estimate expected +2.6% y/y, Jan +2,7% y/y. |
| 0500 ET | Jan Euro-Zone unemployment rate expected unchanged at 10.4%, Dec unchanged at 10.4%. |
| 1100 ET | EU leaders hold a 2-day summit in Brussels. |
| Canada | |
| 0830 ET | Jan Canada industrial product prices expected +0.3% m/m, Dec -0.7% m/m. |
| 0830 ET | Jan Canada raw materials price index expected -0.5% m/m, Dec -2.4% m/m. |
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