Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are trading lower due to last Friday's weaker-than-expected March payroll report of +120,000, which was well below the consensus of +205,000. June E-mini S&Ps this morning are trading down 15.00 points (-1.1%), which was roughly where the contract closed last Friday morning after the abbreviated morning session. The European markets are closed today for Easter Monday.
- Asian stocks today closed lower across the board by about 1% on average, in line with last Friday's loss in E-mini S&Ps. Asian stocks at least did not leap-frog the U.S. market lower. Asian closes: Japan -1.47%, China -0.98%, Taiwan -1.37%, Singapore -0.87%, South Korea -1.51%, India -1.51%, and Karachi -0.14%. The markets in Hong Kong and Australia today were closed for the holiday. China's March CPI was reported at +3.6% y/y, up from +3.2% in February and stronger than the market consensus of +3.4%. The report will give the Chinese central bank less flexibility to ease in response to the slowing economy. China's Q1 GDP report on Thursday is expected to show that Chinese economic growth eased to +8.4% y/y from +8.9% y/y in Q4. The CPI report helpd push Chinese stocks today down -0.98%.
- Talks with Iran on its nuclear program for later this week were confirmed on Sunday by the European Union spokesman. The 2-day talks will begin on Saturday (April 14) in Istanbul. Iran had been waffling about where the talks would take place, but the date and location have now been confirmed. North Korea now appears to be preparing for a nuclear test to follow its intended launch within the next week of a long-range rocket. North Korea has said it would launch the rocket sometime between this Thursday and next Monday (April 12-16).
- June S&Ps this morning are trading down 15.60 (-1.12%) at 1374.60, which is close to where futures closed last Friday morning after the bearish March payroll report. The U.S. stock market Friday was closed for Good Friday, although stock index futures sold-off sharply during the abbreviated Globex session after the smaller-than-expected increase in Mar U.S. non-farm payrolls. These closes reflect last Thursday's session: Dow Jones -0.11%, S&P 500 -0.06%, Nasdaq Composite +0.40%. Bearish factors Friday included (1) the smaller-than-expected increase in Mar U.S. non-farm payrolls which rose at the slowest pace in 5 months (+120,000 versus expectations of +205,000) and (2) concerns about the banking system in Italy after data from the Bank of Italy showed Italian banks borrowed a record 270 billion euros from the ECB in March, which shows they had difficulty funding themselves through the interbank markets and had to rely on the ECB for their funding needs.
- Bullish factors Friday included (1) the unexpected decline in the Mar U.S. unemployment rate to a 3-year low (-0.1 to 8.2% versus expectations of unchanged at 8.3%) and (2) the larger-than-expected increase in Mar U.S. manufacturing payrolls (+37,000 versus expectations of +20,000).
- June 10-year T-notes this morning are trading -0.5 tick. T-note prices Friday posted a 3-1/2 week high as they rallied throughout the abbreviated holiday session and settled sharply higher after the smaller-than-expected increase in Mar U.S. non-farm payrolls renewed speculation the Fed may need to provide additional monetary stimulus to sustain the economic recovery: TYM2 +1-2.5/32, FVM2 +15.0, EDU2 -1.0. The 10-year T-note yield fell to a 3-1/2 week low of 2.039%. Bullish factors Friday included (1) the smaller-than-expected increase in Mar U.S. non-farm payrolls which rose at the slowest pace in 5 months (+120,000 versus expectations of +205,000) and (2) increased safe-haven demand for Treasuries on concern the European sovereign-debt crisis may worsen after data from the Bank of Italy showed Italian banks borrowed a record 270 billion euros from the ECB in March, which shows they had difficulty funding themselves through the interbank markets and had to rely on the ECB for their funding needs. Bearish factors included (1) the unexpected decline in the Mar U.S. unemployment rate to a 3-year low (-0.1 to 8.2% versus expectations of unchanged at 8.3%) and (2) the larger-than-expected increase in Mar U.S. manufacturing payrolls (+37,000 versus expectations of +20,000).
- The dollar index this morning is trading slightly higher by +0.012 at 79.898. USD/JPY is down 0.31 yen at 81.33 and EUR/USD is down -0.03 at 1.3074. The dollar index Friday settled lower on concern the Fed may increase monetary stimulus after Mar U.S. non-farm payrolls rose less than expected: Dollar Index -0.190, USD/JPY -0.778, EUR/USD +0.00300. Bearish factors included (1) the smaller-than-expected increase in Mar U.S. non-farm payrolls, which fueled speculation the Fed may implement QE3, which would be dollar negative and (2) strength in the yen which rallied to a 1-month high against the dollar after the Feb Japan coincident index CI rose more than expected to its best level in a year (+1.0 to 93.7) and the Feb Japan leading business cycle index rose at its fastest pace in 4-years (+2.1 to 96.6). Bullish factors included (1) increased safe-haven demand after U.S. stock futures plunged on the weaker-than-expected Mar U.S. non-farm payrolls and (2) increased safe-haven demand for the dollar on concern the European debt crisis may worsen after data from the Bank of Italy showed total borrowing by Italian banks from the ECB surged +40% m/m in March to a record 270 billion euros, which shows that Italian banks must rely on the ECB for their funding needs as they continue to face difficulty in accessing the interbank markets.
- May crude oil prices this morning are down $1.49 a barrel and May gasoline is down 3.25 cents per gallon. Crude oil futures are reacting for the first time to last Friday's weak March payroll report since the market was closed last Friday. Crude oil and gasoline prices last Thursday settled higher on signs of economic strength after U.S. jobless claims fell to a nearly 4-year low: CLK12 +$1.84, RBK +0.69. Bullish factors included (1) the larger-than-expected decline in weekly U.S. initial unemployment claims to a nearly 4-year low, which raises hopes that fuel demand will increase as the economy improves and (2) speculation that Friday's Mar non-farm payrolls may be stronger than expected, which would signal a stronger economy that is supportive for fuel demand, after Mar Canadian employment rose by 7 times the amount expected and the unemployment rate matched a 3-year low. Bearish factors included (1) the rally in the dollar index to a 3-week high, which reduces investment demand in commodities, (2) the larger-than-expected decline in Feb German industrial production, which signals reduced energy consumption, and (3) concern the European debt crisis will worsen and slow global growth and fuel demand after the yield spread between Spanish and German 10-year maturities reached 400 bp for the first time since Dec 12.
Global Financial Calendar
| Monday 4/9/12 | |
|---|---|
| United States | |
| 1130 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| 1800 ET | Fed Chairman Ben Bernanke delivers the keynote speech at the Atlanta Fed conference on ?Financial Reform: The Devil?s in the Details.? |
| Japan | |
| 0030 ET | Mar Japan bankruptcies, Feb +5.2% y/y. |
| 0100 ET | Mar Japan eco watchers survey current expected 46.5, Feb 45.9. Mar eco watchers survey outlook, Feb 50.1. |
| Canada | |
| 1030 ET | Q1 Canada business outlook future sales, Q4 -4.00. |
| United Kingdom | |
| n/a | U.K. markets closed for Easter Monday. |
| 1901 ET | Mar U.K. RICS house price balance expected -12%, Feb -13%. |
| Germany | |
| n/a | German markets closed for Easter Monday. |
| France | |
| n/a | French markets closed for Easter Monday. |
| Euro-Zone | |
| n/a | Euro-Zone markets closed for Easter Monday. |
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