Barchart Morning Call 4/10

Barchart Morning Call

Barchart.com - Tue Apr 10, 7:00AM CDT

Overnight Developments

• Global stocks this morning are trading mixed. June E-mini S&Ps are trading slightly lower by -2.00 points. However, the Euro Stoxx 50 is down 0.89% as the European markets reopen after holidays on Friday and Monday and get their first chance to react to last Friday's weak U.S. March payroll report of +120,000. Stocks are lower as Spanish 10-year bond yields today rose by another 10 bp to 5.86% as the market worries about Spain's fiscal and economic situation. The 10-year Italian yield today rose by 6 bp to 5.50%. Spanish Prime Minister Rajoy met with his health and education ministers on Monday to discuss another 10 billion euros of spending cuts. Spain needs to pass its budget for this year that brings the deficit down to 5.3% of GDP from about 8% last year and then Spain needs to meet its promise to cut its budget deficit to 3% for next year. In some good news for Europe, Germany's trade report today showed that imports rose by 3.9% and that exports rose by 1.6%, which were both stronger than expectations of +1.3% and -1.2%, respectively. Germany's trade surplus was 14.7 billion euros, wider than expectations of 12.0 billion. The French March business sentiment index from the Bank of France was unchanged at 95, which was 1 point weaker than market expectations of 96. French Feb industrial production was reported at +0.3% m/m, which was in line with market expectations, although the year-on-year figure of -1.9% was weaker than market expectations of -1.2%.
• Asian stocks today closed mixed: Japan -0.09%, Hong Kong -1.15% (after Monday's holiday), China +0.99%, Taiwan +0.52%, Australia -0.64%, Singapore +0.75%, South Korea -0.19%, India +0.13%. Asian stock markets that were open on Monday and already reacted to last Friday's weak U.S. payroll report generally closed higher today, except for South Korea's stock market, which closed lower by -0.19% as the market worries about North Korea's move to launch a rocket later this week and possibly test a nuclear weapon as well. The Bank of Japan at its meeting today left its policy unchanged, which was in line with market expectations. China's March trade report showed that imports rose +5.3%, which was a smaller increase than expectations of +9% and suggested weak domestic demand.

Overnight U.S. Stock News

• June S&Ps this morning are trading .... The U.S. stock market on Monday sold off fairly sharply due to last Friday?s weaker-than-expected March payroll report of +120,000 (versus expectations of +205,00): Dow Jones -1.00%, S&P 500 -1.14%, Nasdaq Composite -1.08%. The European stock markets were closed on Monday for Easter Monday, which lightened U.S. trading volume. Other bearish factors on Monday included (1) carry-over concerns about last week's flare-up in the European debt crisis, (2) South Korea's assertion that North Korea may soon test a nuclear weapon in addition to its intended launch of a rocket between this Thursday and next Monday, and (3) China's report that its March CPI rose +3.6% y/y, which was up from +3.2% in Feb and was stronger than expectations of +3.4% and reduced the flexibility of China's central bank to ease monetary policy to combat the slower economy. A bullish factor was Iran's final agreement to talks starting Saturday, which helped bring down crude oil prices.

Today's Market Focus

• June 10-year T-notes this morning are trading -2 ticks on some long liquidation pressure after the sharp 2-session rally. T-note prices on Monday extended last Friday's rally on the payroll report and closed higher: TYM2 +3, FVM2 -0.25, EDU2 +0.005. T-note prices on Monday were also boosted by safe-haven demand with weaker global stocks and news that North Korea may soon test a nuclear weapon in addition to launching a long-range rocket.
• The dollar index this morning is trading _0.119 points. USD/JPY is up 0.51 yen and EUR/USD is unchanged. The Swiss franc is little changed this morning after it strengthened on Monday through the Swiss central bank's cap, which was only the second time the cap has been breached since it was imposed on September 6, 2011. The Swiss National Bank said today that it engaged in some "isolation" intervention to enforce the cap. The dollar index on Monday closed mildly lower in continued reaction to last Friday's weak U.S. payroll report: Dollar Index -0.153, USD/JPY -0.03, EUR/USD +0.0022. The payroll report undercut U.S. interest differentials and encouraged market speculation that QE3 may be back on the table. The European markets were closed on Monday for Easter Monday, which substantially undercut trading volume in the FX market.
• May crude oil prices this morning are trading down 0.41 cents a barrel and May gasoline is down 0.98 cents per gallon. Crude oil prices are lower today at the market looks forward to Wednesday's weekly DOE report, which is expected to add another 2 million barrels to the surge to crude oil inventories seen in the past two weeks and reach a 22-year high. Crude oil prices on Monday fell moderately due to last Friday's weak U.S. March payroll report: CLK12 -$0.85, RBK2 -$0.0438. Crude oil prices were also pressured yesterday by Iran's final agreement to nuclear talks starting Saturday in Istanbul. Iran had been waffling on the location and timing of the talks, which made it appear that Iran is not serious about any compromise and is simply stalling for time. Israel?s defense minister called on Iran to stop enriching uranium up to 20%, give up any uranium material already enriched to 20%, and close the Fordo underground enrichment facility near Qom. While talks are ongoing with Iran, Israel has little choice but to stand aside and wait for the outcome before it can reasonably launch a military attack.

Today's U.S. Earnings Reports Earnings reports (sorted by mkt cap): none.
Global Financial Calendar

Tuesday 4/10/12
United States
0745 ET	ICSC (Int?l Council of Shopping Centers) weekly retailer sales.
0830 ET	Monthly USDA crop production and WASDE reports. 2011-12 U.S. ending stocks expected 717 million bushels for corn (last USDA estimate was 801 million), 246 million bushels for soybeans (last 275 million), 796 million bushels for wheat (last 865 million).
0855 ET	Redbook weekly retailer sales.
1000 ET	Apr IBD/TIPP economic optimism, Mar -1.9 to 47.5.
1000 ET	Feb wholesale inventories expected +0.5%, Jan +0.4%.
1130 ET	Weekly 4-week T-bill auction.
1230 ET	Dallas Fed President Richard Fisher speaks at the University of Oklahoma on the economy and the Dallas Fed?s views on too-big-to-fail banks.
1245 ET	Atlanta Fed President Dennis Lockhart delivers opening remarks at the Atlanta Fed conference on ?Financial Reform: The Devil?s in the Details.?
1300 ET	Treasury auctions $32 billion 3-year T-notes.
1430 ET	Minneapolis Fed President Kocherlakota speaks at an event in Nicollet, MN.
1630 ET	API weekly U.S. oil statistics.
n/a	S&P 500 Earnings: AA-Alcoa (consensus -$0.05), SVU-Supervalu ($0.35).
Germany
0200 ET	Feb German trade balance expected +12.0 billion euros, Jan +13.1 billion euros. Feb exports expected -1.2%, Jan +2.4%. Feb imports expected +1.3%, Jan +2.4%.
Japan
0200 ET	Mar Japan machine tool orders, Feb -8.6% y/y.
1950 ET	Feb Japan machine orders expected -0.8% m/m and +3.0% y/y, Jan +3.4% m/m and +5.7% y/y.
n/a	BOJ announces interest rate decision (expected no change to the 0.00% to 0.10% benchmark rate).
France
0230 ET	Mar Bank of France business sentiment expected +1 to 96. Feb -1 to 95.
0245 ET	Feb France industrial production expected +0.3% m/m and -1.4% y/y, Jan +0.3% m/m and -1.5% y/y.
0245 ET	Feb France manufacturing production expected unchanged m/m and -1.7% y/y, Jan +0.2% m/m and -1.2% y/y.
Euro-Zone
0430 ET	Apr Euro-Zone Sentix investor confidence expected -0.9 to -9.1, Mar +3.3 to -8.2.
1130 ET	ECB Council member Ewald Nowotny speaks on a panel at the Agenda Austria 2020 conference in Vienna.
United Kingdom
0430 ET	Feb U.K. DCLG house prices, Jan +0.2% y/y.
CHI
n/a	Mar China trade balance expected -$3.15 billion, Feb -$31.48 billion. Mar exports expected +7.0% y/y, Feb +18.4% y/y. Mar imports expected +9.0% y/y, Feb +39.6% y/y.

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