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Overnight Developments
Global Financial Calendar
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- Global stock and commodity prices are mostly higher with June E-mini S&Ps up +7.00 points and the Euro Stoxx 50 up +1.14%. The dollar and Treasuries fell while stocks and commodities gained after yields on Spanish government debt fell and after German investor confidence unexpectedly rose for a fifth month. The yield on the Spanish 10-year bond tumbled 15 bp to 5.87% after Spain sold 3.18 billion euros of bills, higher than the maximum target of 3 billion euros. Stocks extended their gains after the Apr German ZEW economic sentiment survey unexpectedly rose +1.1 to 23.4, better than expectations of a -2.8 decline to 19.5 and its strongest pace in 22 months. U.S. stocks also received a boost and Treasuries were undercut by comments made late Monday from St. Louis Fed President Bullard who said the economy is "on track" and Fed "policy can stay on hold for now." Bullard added that U.S. economic growth will quicken from a range of 2.5% to 2.7% during Q1 of 2012 to 3.0% for the entire year and that the Fed will probably need to tighten policy during the "last part of 2013." Limiting gains in the euro and stocks was the faster than expected increase in European consumer prices after the Mar Euro-Zone CPI climbed +1.3% m/m and +2.7%, stronger than expectations of +1.2% m/m and +2.6% y/y.
- Asian stocks today closed mostly lower with Japan down -0.06%, China -1.25%, Australia -0.31%, South Korea -0.44%, India +1.21%. Japanese stocks finished lower after Feb Japan industrial production was revised down to a -1.6% m/m decline from the originally reported -1.2% m/m fall, while Chinese stocks closed lower after foreign direct investment into China dropped for a fifth month. Although Mar China foreign direct investment fell -6.1% y/y, it was better than expectations of -13.6% m/m. Australian stocks finished slightly lower after the minutes of the RBA's Apr 3 monetary policy meeting showed that central bank members lowered their assessment of economic growth. Stocks in India rallied and settled higher after India's central bank cut interest rates more than expected when the RBI lowered the repurchase rate 50 bp to 8.0%, greater than expectations of a 25 bp cut to 8.25%.
- June E-mini S&Ps this morning are trading up +7.00 points as Spanish government bonds rallied and after German investor confidence unexpectedly improved. The U.S. stock market on Monday settled mixed as heightened European debt concerns and weakness in technology stocks overshadowed optimism about the U.S. economy after Mar retail sales rose more than expected: Dow Jones +0.56%, S&P 500 -0.05%, Nasdaq Composite -0.76%. The Nasdaq fell to a 1-month low. Bearish factors included the rise in credit-default swaps to insure Spanish government debt to an all-time high, which fuels concern the European sovereign-debt crisis may worsen, along with weakness in technology stocks after Apple settled lower for a fifth consecutive session. Apple accounts for 19% of the Nasdaq's value and therefore influences its moves more than any other stock. Stocks were also pressured after the Apr Empire manufacturing index fell more than expected to its weakest level in 5 months (-13.6 to 6.6) and after the unexpected decline in the Apr NAHB housing market index (-3 to 25). Bullish factors for stocks centered on the stronger-than-expected Mar U.S. retail sales which gained +0.8% and +0.8% less autos, better than expectations of 0.4% and +0.6% less autos and increased M&A activity which gave stock prices an early lift.
- June 10-year T-notes this morning are trading down -6.5 ticks. T-note prices Monday rallied up to a 2-1/2 month high and settled higher on increased safe-haven demand over concern the European sovereign-debt crisis may was intensify: TYM2 +5.0, FVM2 +2.0. Bullish factors included concern Spain may be the next Euro-Zone nation that needs a bailout after its 10-year bond yield soared to a 4-month high along with weaker-than-expected U.S. economic data on Apr Empire manufacturing which slowed to its weakest pace in 5 months (-13.6 to 6.6) and after the Apr NAHB housing market index unexpectedly fell (-3 to 25). T-note prices climbed even higher and 10-year yields fell further below 2% after Treasury data showed China and Japan, the biggest and second-biggest holders of U.S. Treasuries, respectively, increased their U.S. debt holdings in Feb. A bearish factor was the stronger-than-expected Mar U.S. retail sales which gained +0.8% and +0.8% less autos, better than expectations of 0.4% and +0.6% less autos.
- The dollar index this morning is lower with USD/JPY +0.25 yen and EUR/USD -0.02 cents. The dollar index Tuesday posted a 1-week high on increased safe-haven demand after the euro tumbled to a 2-month low against the dollar on concern the European debt crisis was spreading when credit-default swaps to insure Spanish government debt rose to an all-time high, but gains in the dollar evaporated and the index closed lower after the Feb net long-term TIC data showed reduced foreign demand for dollar assets: Dollar Index -0.333, USD/JPY -0.518, EUR/USD +0.00649. Bullish factors for the dollar were concern over contagion of the European sovereign-debt crisis to Spain after the price of credit-default swaps to insure Spanish government debt surged to a record 511.5 bp, according to CMA prices, when Spain's deputy finance minister said the ECB should "step up purchases of bonds" along with the strong Mar U.S. retail sales data, which reduces the chances of additional easing measures by the Fed. Negative factors for the dollar that caused the dollar to shed its gains were the smaller-than-expected increase in the Feb net long-term TIC flows (+$10.1 billion versus expectations of +$40.0 billion), a sign of weakened foreign demand for U.S. dollar assets, and the weaker than expected Apr Empire manufacturing and Apr NAHB housing market indexes, which bolsters speculation the Fed will maintain its overly easy monetary policies.
- May crude oil prices this morning are trading up +71 cents a barrel and May gasoline is -0.69 of a cent per gallon. Crude oil prices on Monday settled mixed after strong Mar U.S. retail sales offset "constructive" talks between Iran and the UN Security Council and after Endbridge pushed up the date for the reversal of flow on the Seaway crude pipeline: CLM12 +0.10, RBM2 -7.91. The main bearish factors were the action by the UN Security Council and Iran to agree to reconvene May 23 in Baghdad, which suggests progress on a solution to Iran's nuclear program and reduces tensions in the Middle East, along with the statement from Enbridge that they would start moving crude oil via the Seaway pipeline from Cushing, Oklahoma to refineries on the Gulf Coast in mid-May, 2-weeks ahead of schedule. Crude gained after Mar U.S. retail sales rose more than expected and after Nigeria's main rebel group, MEND, threatened to mount "sustained strikes on all pipelines and facilities remotely related to Nigerian oil industry," which may reduce oil production in Africa's biggest oil producing country.
Global Financial Calendar
| Tuesday 4/17/12 | |
|---|---|
| United States | |
| 0745 ET | ICSC (Int?l Council of Shopping Centers) weekly retailer sales. |
| 0830 ET | Mar housing starts expected +1.0% to 705,000, Feb -1.1% to 698,000. Mar building permits expected -0.7% to 710,000, Feb +4.8% to 715,000. |
| 0855 ET | Redbook weekly retailer sales. |
| 0915 ET | Mar industrial production expected +0.3%, Feb unchanged. Mar capacity utilization expected +0.1 to 78.5%, Feb unchanged at 78.4%. |
| 1130 ET | Weekly 4-week T-bill auction. |
| Japan | |
| 0030 ET | Revised Feb Japan industrial production, previous -1.2% m/m and +1.5% y/y. Revised Feb capacity utilization, previous +3.4% y/y. |
| 0100 ET | |
| Mar Japan consumer confidence expected +0.5 to 40.0, Feb -0.5 to 39.5. | |
| United Kingdom | |
| 0430 ET | Feb U.K. DCLG house prices, Jan +0.2% y/y. |
| 0430 ET | Mar U.K. CPI expected +0.3% m/m and +3.4% y/y, Feb +0.6% m/m and +3.4% y/y. Mar core CPI expected +2.3% y/y, Feb +2.4% y/y. |
| 0430 ET | Mar U.K. RPI expected +0.4% m/m and +3.6% y/y. Mar RPI ex-mortgage interest payments expected +3.7% y/y, Feb +3.8% y/y. |
| Germany | |
| 0500 ET | Apr German ZEW economic sentiment survey expected -2.8 to 19.5, Mar +16.9 to 22.3. Apr ZEW current situation expected -2.6 to 35.0, Mar -2.7 to 37.6. |
| Euro-Zone | |
| 0500 ET | Mar Euro-Zone CPI expected +1.2% m/m and +2.6% y/y. Mar core CPI expected +1.5% y/y, Feb +1.5% y/y. |
| Canada | |
| 0830 ET | Feb Canada manufacturing sales expected -0.1% m/m, Jan -0.9% m/m. |
| 0900 ET | BOC announces interest rate decision, (expected no change to the 1.00% benchmark rate). |
| CHI | |
| 2130 ET | Mar China property prices. |
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