Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are higher with the Euro Stoxx 50 up +1.27% and Mar S&Ps up +11.90 points. Treasuries, bunds and the dollar weakened as stocks and commodities rose on speculation Greece will attract enough investors to make its debt-swap plan a success. The yield on the Italian 10-year bond fell to a 9-month low of 4.75% as investors with about 60% of the Greek bonds eligible for the nation's debt swap indicated a willingness to participate. Another positive for stocks and commodities was the strength in Jan German industrial production which rose +1.6% m/m and +1.8% y/y, stronger than expectations of +1.1% m/m and +1.1% y/y. On the negative side, the Feb Bank of France business sentiment unexpectedly fell -1 point to 95 and matched its lowest level in 2-1/2 years. As expected, the BOE maintained its benchmark rate at 0.50% and kept its asset purchase target at 325 billion pounds.
- Asian stocks today closed higher with Japan up +2.01%, China +1.26%, Australia +0.66%, South Korea +0.96%, India closed for holiday. Asian stocks closed higher after Japan's economy contracted less than originally estimated and as Greece moved closer to completing its debt swap. The yen weakened against the dollar and boosted Japanese exporters after the Jan Japan current-account deficit was reported at -437.3 billion yen, wider than expectations of a -320 billion-yen deficit and the biggest shortfall since data began in 1985. Higher-than-estimated capital spending was responsible for an upward revision of Q4 Japan GDP to -0.2% q/q and -0.7% y/y from the originally reported -0.6% q/q and -2.3% y/y. Chinese stocks finished higher on speculation the government will increase efforts to stimulate the economy even after Standard & Poor's warned that Chinese home prices may fall 10% by June from a year earlier and that property developers face more credit rating downgrades over the next 6 months as refinancing risks increase.
- March S&Ps this morning are trading up +11.90 points. The U.S. stock market Wednesday rallied after a private report showed U.S. companies increased hiring last month along with reduced Greek default concerns as more investors signed on to a Greek debt swap deal: Dow Jones +0.61%, S&P 500 +0.69%, Nasdaq Composite +0.87%. Bullish factors Wednesday included (1) optimism that the U.S. labor market will continue to strengthen after the Feb ADP employment change rose +216,000, slightly above expectations of +215,000 and after December's ADP increase was revised up to +173,000 from the originally reported +170,000, (2) reduced Greek default concerns after investors with 58% of the Greek bonds eligible for the debt-swap program indicated they'll agree to terms of the bond exchange, and (3) the larger-than-expected increase in Jan U.S. consumer credit (+$17.776 billion, larger than expectations of +$10.800 billion).
- Bearish factors Wednesday centered on global economic concerns after (1) Q4 Australian GDP rose +0.4% q/q, weaker than expectations of +0.8% q/q, (2) Jan German factory orders unexpectedly fell -2.7% m/m, weaker than expectations of a +0.6% m/m increase, and (3) after Chinese Commerce Minister Chen Deming said China's exports rose about 7% over the first two months of this year, which signals Feb China exports, to be released on Mar 10, will be less than the +32% y/y gain expected.
- June 10-year T-notes this morning are down -5.5 ticks. T-note prices Wednesday settled lower as an increase in private hiring in the Feb ADP employment change bolstered optimism in the U.S. economic outlook and reduced the safe-haven demand for Treasuries: TYM2 -6.5, FVM2 -5.0, EDU2 +0.5. Bearish factors Wednesday included (1) the +216,000 gain in the Feb ADP employment change, slightly above expectations of +215,000 and as December's ADP increase was revised up to +173,000 from the originally reported +170,000, and (2) decreased safe-haven demand for Treasuries after the stock market rallied on expectations Greece will be able to complete its debt swap as more investors of Greek debt signed on to the offer. Bullish factors included (1) the Fed's purchase of $1.969 billion of Treasuries as part of its Operation Twist program to replace $400 billion of short-term debt in its portfolio with longer-term Treasuries in an effort to keep borrowing costs low and (2) global economic concerns after Jan German factory orders unexpectedly declined and after Q4 Australian GDP expanded less than expected.
- The dollar index this morning is lower with the dollar/yen +0.61 yen and the euro/dollar +1.14 cents. The dollar index Wednesday fell back from a 2-1/2 week high and settled lower on reduced safe-haven demand as stocks and EUR/USD rallied as more investors decided to accept the terms of the Greek debt-swap program: Dollar Index -0.154, USD/JPY +0.194, EUR/USD +0.00366. Bearish factors included (1) strength in EUR/USD after investors with 58% of the Greek bonds eligible for the debt-swap program indicated they'll agree to terms of the bond exchange, (2) reduced safe-haven demand for the dollar as stocks rallied, and (3) reduced dollar funding costs for European banks after the 3-month cross-currency basis swap, the rate banks pay to convert euro interest payments into dollars, fell to 65.5 bp below the euro interbank offered rate, a 7-month low. Bullish factors included (1) the unexpected decline in Jan German factory orders, which is euro negative and (2) concerns over a global economic slowdown, which boosts the safe-haven demand for the dollar, after Q4 Australian GDP rose +0.4% q/q, weaker than expectations of +0.8% q/q, and after Chinese Commerce Minister Chen Deming said China's exports rose about 7% over the first two months of this year, which signals Feb China exports, to be released on Mar 10, will be less than the +32% y/y gain expected.
- Apr crude oil prices this morning are up +83 cents a barrel and Apr gasoline is +2.88 cents per gallon. Crude oil and gasoline prices Wednesday rebounded from early losses and settled higher as an increase in Greece's debt-swap program reduced Greek default concerns and boosted equities and optimism in the economic outlook and energy demand: CLJ12 +$1.46, RBJ +5.75. Apr crude posted a 2-week low but shed its losses and finished higher. Bullish factors included (1) the reversal in the dollar after the dollar index posted a 2-1/2 week high but erased its advance and closed lower, which boosts investment demand in commodities, (2) reduced concern that Greece will default and throw the global economy into chaos after more investors signed on to its debt-swap program, and (3) the strong Feb ADP employment change, which bodes well for continued economic growth and increased fuel demand. Bearish factors included (1) the smaller-than-expected decline in weekly DOE gasoline supplies (-396,000 bbl versus expectations of -1.75 million bbl), (2) the increase in weekly DOE crude stockpiles to a 5-3/4 month high (+832,000 bbl to 345.7 million bbl), and (3) concern that a slowdown in the global economy will reduce energy demand after Jan German factory orders unexpectedly declined and after Q4 Australian GDP rose less than expected.
Global Financial Calendar
| Thursday 3/8/12 | |
|---|---|
| United States | |
| 0730 ET | Feb Challenger job cuts, Jan +38.9% y/y. |
| 0830 ET | Weekly initial unemployment claims expected unchanged at 351,000, previous -2,000 to 351,000. Weekly continuing claims expected -2,000 to 3.400 million, previous -2,000 to 3.402 million. |
| 1100 ET | Treasury announces amounts of 3-year T-notes (previous $32 billion), 10-year T-notes (previous $24 billion) and 30-year T-bonds (previous $16 billion) to be auctioned Mar 12-14. |
| 1630 ET | Weekly money supply report and Fed balance sheet. |
| Japan | |
| 0000 ET | Feb Japan eco watchers survey current expected +1.9 to 46.0, Jan -2.9 to 44.1. Feb eco watchers survey outlook, Jan +2.7 to 47.1. |
| 0100 ET | Feb Japan machine tool orders, Jan -6.9% y/y. |
| France | |
| 0130 ET | Revised Q1 French payrolls expected no change at -0.2% q/q. |
| 0230 ET | Feb Bank of France business sentiment expected unchanged at 96, Jan unchanged at 96. |
| 0245 ET | Jan French trade balance expected -5.150 billion euros, Dec -4.993 billion euros. |
| Germany | |
| 0600 ET | Jan German industrial production expected +1.1% m/m and +1.1% y/y, Dec -2.9% m/m and +0.9% y/y. |
| United Kingdom | |
| 0700 ET | BOE announces interest rate decision (expected no change to the 0.50% benchmark rate) and asset purchase target (expected no change at 325 billion pounds). |
| Euro-Zone | |
| 0745 ET | ECB announces interest rate decision (expected no change to the 1.00% 2-week refinancing rate). |
| 0830 ET | ECB President Mario Draghi speaks at monthly press conference. |
| Canada | |
| 0815 ET | Feb Canada housing starts expected +200,000, Jan +198,000. |
| 0830 ET | Jan Canada new housing price index expected +0.1% m/m and +2.5% y/y, Dec +0.1% m/m and +2.5% y/y. |
| 0900 ET | BOC announces interest rate decision (expected no change to the 1.00% benchmark rate). |
| CHI | |
| 2030 ET | Feb China CPI expected +3.4% y/y, Jan +4.5% y/y. |
| 2030 ET | Feb China PPI expected +0.1% y/y, Jan +0.7% y/y. |
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