Barchart Morning Call 1/22

Barchart Morning Call

BC - 2 hrs 32 mins ago

Overnight Developments

• March E-mini S&Ps this morning are unchanged as the market awaits developments on the debt ceiling, today's Richmond Fed and existing home sales reports, and this week's heavy earnings schedule. European stocks this morning are slightly lower by -0.11%. Asian stocks today closed mixed with Japan down -0.35%, Hong Kong up +0.29%, and China down -0.54%. Commodity prices are mildly higher by +0.29%. March crude oil is down -0.07%, March gasoline is up +0.33%, Feb gold is up +0.27%, March silver is up +0.06%, March copper is up +0.15%, grains are up between +0.7% and +1.3%, and livestock and softs are mixed. The dollar index is down -0.32% and EUR/USD is up +0.23%. USD/JPY fell sharply by 1.0% after the BOJ did not expand its asset purchase program for this year. March 10-year T-notes are down 5 ticks.
• The BOJ at its 2-day meeting that ended last night NY time announced that it raised its inflation target to 2% from 1%, as demanded by Prime Minister Abe. The BOJ said it would shift to an open-ended asset purchase program starting in 2014 with additional security purchases of $145 billion per month. However, the BOJ left its current asset purchase program unchanged through 2013, causing the yen to strengthen sharply (USD/JPY to drop). There is speculation that the BOJ's current asset purchase program for 2013 may now remain unchanged until April when BOJ chief Shirakawa's term ends. Prime Minister Abe will then appoint a more dovish BOJ chief who may raise the BOJ's asset purchase program immediately. BOJ chief Shirakwa at a briefing today said that the BOJ preserved its independence with its decision today of refusing to immediately raise the BOJ's asset purchase program to satisfy political demands.
• Spain today successfully sold 2.8 billion euros of bills, exceeding the target of 2.5 billion euros. The 3-month bills were sold at an average 0.441%, down sharply from 1.195% on December 18. The 6-month bills were sold at 0.888%, down from 1.609% in December. There was strong demand for the bills with a 4.19 bid cover ratio for the 3-month bills and 2.57 for the 6-month bills.
• The German Jan ZEW investor confidence index rose sharply to a 2-1/2 year high of 31.5 from 6.9 in December, which was much stronger than market expectations for an increase to 12. The ZEW current situation index rose to 7.1 from 5.7 in Dec, which was stronger than market expectations of 6.2. The Eurozone Jan ZEW investor confidence index rose sharply to 31.2 from 7.6 in December, marking a strong showing like the German ZEW index.
• The UK CBI Trends Jan total orders index fell to -20 from -12 in Dec and was weaker than market expectations for a 1 point increase to -11. However, the CBI Jan business optimism index improved to zero from -12 in Dec and was stronger than market expectations for a 2 point improvement to -10.
• The Turkish central bank today cut its overnight lending rate by 25 bp to 8.75% from 9.0% and its overnight borrowing rate by 25 bp to 4.75% from 5%. The bank left its benchmark repo rate unchanged. The rate cuts were more aggressive than market expectations for unchanged rates. The rate cut appeared to be driven by worries about a strong lira driven by large capital inflows to buy Turkish stocks and bonds. The lira in the past month has strengthened by 2% against the U.S. dollar.
  Market Comments
  • March E-mini S&Ps this morning are trading unchanged as the market treads water ahead of this week's busy news schedule. The S&P 500 index on Friday rallied to another new 5-year high on optimism about the House Republicans' offer for a 3-month debt ceiling extension and positive earnings reports from GE and Morgan Stanley. The market was able to shake off the weak-than-expected U.S. consumer confidence report and the earnings-related sell-off of -6.3% in Intel and -7.5% in Capital One. Closes: S&P 500 +0.34%, Dow Jones +0.39%, Nasdaq -0.14%.
  • March 10-year T-notes this morning are down 5 ticks on the stable risk environment so far this week. March 10-year T-note prices on Friday closed moderately higher on the weak U.S. consumer confidence report and on ongoing concerns about the upcoming fiscal battles even though the debt ceiling is likely to be extended by only about 3 months. Closes: TYH3 +8.5, FVH3 +4.25.
  • The dollar index this morning is down -0.26 points. EUR/USD is up +0.0030 (+0.23%) on the strong German and Eurozone ZEW investor confidence indexes. USD/JPY is sharply lower by -0.96 yen (-1.07%) due to the BOJ's refusal to boost its asset purchase target for 2013. The dollar index on Friday closed moderately higher as foreign investors took an increased interest in dollar-denominated securities with the offer from House Republicans to extend the debt ceiling by 3 months. Closes: Dollar index +0.39 (+0.49%), EUR/US -0.0055 (-0.41%), USD/JPY +0.22 (+0.24%).
  • March WTI crude oil this morning is slightly lower by -0.07 (-0.07%) and March gasoline is up +0.0092 (+0.33%). Feb crude oil and gasoline prices closed higher on Friday as the IEA raised its forecast for 2013 oil demand by 240,000 bpd to a record 90.8 million bpd, up +1% y/y, and indicated that the world oil market is tighter than earlier thought. The IEA said OPEC cut its production to a 1-year low in December of 30.65 million bpd. Closes: CLG3 +0.07 (+0.07%), RBG3 +0.0284 (+1.03%).
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    Today's U.S. Earnings ReportsEarnings reports (ranked by market cap): GOOG-Google (consensus $10.55), IBM (5.25), JNJ-Johnson & Johnson (1.17), BZ-Verizon (0.50), DD-Du Pont (0.07), TXN-Texas Instruments (0.34), FCX-Freeport-McMoran (0.72), TRV-Travelers (0.14), CSX-CSX Corp (0.39), NSC-Norfolk Southern (1.19), ISRG-Intuitive Surgical (4.04), DAL-Delta Airlines (0.28), CA-CA Inc (0.61), RF-Regions Financial (0.21), AMTD-TD Ameritrade (0.24), KSU-Kansas City Southern (0.82), WAT-Waters Corp (1.59), ALB-Albemarle (0.99), RKT-Rock Tenn (1.27), TSS-Total Sys (0.33), IGT-International Game Technology (0.24), PKG-Packaging Corp (0.62).
    Global Financial Calendar

    Tuesday 1/22/13
    United States
    0830 ET	Dec Chicago Fed national activity index, Nov 0.1.
    1000 ET	Jan Richmond Fed manufacturing index expected -1 to 4, Dec -4 to 5.
    1000 ET	Dec existing home sales expected +1.2% to 5.10 million units, Nov +5.9% to 5.04 mln units.
    1100 ET	USDA weekly grain export inspections.
    1500 ET	USDA Cold Storage.
    Japan
    0000 ET	Final Japan Nov leading index CI, previous 91.9. Final Nov coincident index CI, previous 90.1.
    0000 ET	Japan Dec supermarket sales, Nov -2.6% y/y.
    n/a	BOJ announces interest rate decision.
    United Kingdom
    0430 ET	UK Dec public sector net borrowing expected 13.0 bln, Nov 15.3 billion pounds. UK Dec public finances (PSNCR) expected 6.5 bln pounds, Nov -6.8 bln pounds.
    0600 ET	UK Jan CBI trends total orders expected -11, Dec -12. Jan CBI trends selling prices expected 16, Dec 17. Jan CBI business optimism expected -10, Dec -12.
    Germany
    0500 ET	German Jan ZEW survey of economic sentiment expected 12, Dec 6.9. Jan ZEW current situation expected 6.2, Dec 5.7.
    Euro-Zone
    0500 ET	Eurozone Jan ZEW economic sentiment, Dec 7.6.
    IS
    n/a	Israeli national election.
    CHI
    2100 ET	China Dec leading economic index from Conference Board.

    
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