Overnight Developments
- Dec E-mini S&Ps this morning are mildly higher by +0.45% on some continued support from yesterday's stronger-than-expected ADP and ISM non-manufacturing reports. Both the BOE and ECB left their policies unchanged today as expected. European stocks are up +0.11% and Asian stocks closed mostly higher today. Commodity prices are moderately higher today by +0.45% on average, with Nov crude oil up +0.67%, Dec gold up +0.60%, Dec copper up +0.52%, and agriculture prices trading mostly higher. The dollar index is mildly lower by -0.30% today while EUR/USD is up +0.29%. USD/JPY is up +0.14%. Dec 10-year T-notes are down 3 ticks.
- The ECB at its policy meeting today left its refinancing rate unchanged at 0.75% as expected. ECB President Draghi will hold a press conference starting shortly and market participants are hoping to hear more details on the ECB's bond-buying bailout program, which has yet to be formally requested by Spain.
- The Bank of England after its policy meeting today announced an unchanged monetary policy. The base rate remained unchanged at 0.50% and the bond purchase target was unchanged at 375 billion pounds. The meeting outcome was in line with market expectations. The BOE's asset purchase program will run out next month, forcing the BOE to decide next month whether to extend that program.
- There was a report today that Spain, the Netherlands and Finland want to postpone the decision on releasing the next 31.5 billion euro tranche of Greek bailout aid until the Nov 12 meeting of Eurozone finance ministers. The finance ministers had originally been hoping to make that decision at their meeting early next week (Oct 8-9).
- Cyprus will reportedly need an 11 billion euro bailout package to cover a bank bailout and government finances. Cyprus originally requested a bailout back in June and the exact amount is still under discussion.
- Spain today sold 3.99 billion euros of bonds with various maturities. The bid cover ratios (bids submitted divided by bids accepted) were adequate at 1.98 for the 3-year bonds (versus only 1.56 times last month), 2.03 for the 2-year bonds, and 2.47 for the 5-year bonds.
- A World Bank official signaled that the Bank will downgrade Asian's growth forecast in a regional Asian report to be released this coming Monday (Oct 8). The World Bank in May downgraded its 2012 growth forecast for developing East Asia (which excludes Japan and India) to +7.6% from the November forecast of +7.8%. The region grew by +8.2% in 2011.
- Turkey for the second day launched
artillery fire into Syria after Syrian forces shelled a Turkish town on
Wednesday. The Turkish parliament is set to vote later today on whether to give
a 1-year mandate to the Turkish military to allow military operations outside
Turkey. Turkish officials said Turkey does not intend to go to war with Syria
but is "capable of protecting its borders and will retaliate when necessary."
The Turkish 2-year bond yield rose sharply today by 16 bp to 7.73% and the
Turkish lira has fallen by about 1% since yesterday when the Syrian shelling
occurred. NATO has pledged support for its Turkish ally.
Market Comments- Dec E-mini S&Ps this morning are up +6.50 points (+0.45%) on improved U.S. economic sentiment after yesterday's stronger-than-expected ADP and ISM non-manufacturing reports. The S&P 500 index on Wednesday closed higher: S&P 500 +0.36%, Dow Jones +0.09%, Nasdaq 100 +0.70%. Stocks were boosted by stronger-than-expected ADP and ISM manufacturing reports. Sep ADP employment rose +162,000, which was stronger than the expected report of +140,000, although Aug was revised lower to +189,000 from +201,000 and July was revised lower to +156,000 from +173,000. The Sep ISM non-manufacturing index rose by 1.4 points to 55.1 from 53.7 in Aug, which was stronger than expectations for a -0.3 point decline to 53.4. On the bearish side, stocks were undercut by China's Sep ISM non-manufacturing index, which fell by 2.6 points to 53.7.
- Dec 10-year T-notes this morning are down 3 ticks on the higher U.S. and European stock markets. Dec 10-year T-note prices on Tuesday closed higher: TYZ2 +3.5 FVZ2 +2. T-notes closed mildly higher as concerns continued about global economic growth.
- The dollar index this morning is mildly lower by -0.24 points (-0.30%) while EUR/USD is up +0.0038 (+0.29%). USD/JPY is up +0.11 (0.14%). The dollar index on Wednesday closed slightly higher: Dollar index +0.19 (+0.24%), EUR/USD -0.0015 (-0.12%), USD/JPY +0.33 (+0.42%). The dollar index was boosted by the strong U.S. ADP and ISM manufacturing reports.
- Nov WTI crude oil prices this morning are up +0.59 (+0.67%) on some continued short-covering after the sharp losses seen early this week. Nov gasoline is up +0.0463 (+1.65%) this morning. Nov crude oil and gasoline on Wednesday closed sharply lower: CLX2 -3.89 (-4.23%), RBV2 -0.0737 (-2.57%). Bearish factors included the 11,000 barrel/day increase in U.S. total crude oil production to a new 15-3/4 year high, (2) the -0.3% decline in gasoline consumption to 18.3 million barrels per day, and (3) heavy long liquidation pressure with crude oil falling to a new 2-month low. In addition, there were reduced concerns about an eventual military attack on Iran as economic conditions deteriorate in Iran and create problems for the Iranian government in pursuing its nuclear program.
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Today's U.S. Earnings Reports Earnings reports (ranked by market cap): ISCA-International Speedway (Consensus:$0.08).
Global Financial Calendar
Barchart.com provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.Thursday 10/4/12 United States 0730 ET Sep Challenger job cuts, Aug -36.9% y/y. 0830 ET Weekly initial unemployment claims expected +11,000 to 370,000, previous -26,000 to 359,000. Weekly continuing claims expected +4,000 to 3.275 mln, previous -4,000 to 3.271 mln. 0830 ET USDA weekly Net Export Sales. 1000 ET Aug factory orders expected -5.9% m/m, July +2.8% m/m. 1100 ET Treasury announces 3-year, 30-year and 30-year auctions for Oct 9-11. 1400 ET FOMC Sep 12-13 meeting minutes (QE3 announcement). 1630 ET Weekly money supply report and Fed balance sheet. 2000 ET St. Louis Fed President James Bullard speaks on U.S. economy in Memphis, TN. United Kingdom 0700 ET Bank of England announcement after policy meeting; base rate expected unchanged at 0.50%, asset purchase target expected unchanged at 375 bln pounds. Euro-Zone 0745 ET ECB announces decision after policy meeting; main refinancing rate expected unchanged at 0.75%. CHI n/a Chinese markets closed for Golden Week.
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