BC - 2 hrs 29 mins ago
- Dec E-mini S&Ps are mildly higher by +0.24% on support from the +0.98% rally in European stocks and the improvement in the Zew economic sentiment indexes for Germany and the Eurozone. Asian stocks today closed higher nearly across the board with Japan up +1.44% and China up +0.14%. Commodity prices are up +0.58% this morning with Nov crude oil up +0.11%, Dec gold up +0.23%, Dec copper up +0.50%, and agricultural prices trading mostly higher. The dollar index is down -0.32% while EUR/USD is up +0.49%. Dec 10-year T-notes are down 5 ticks.
- The Financial Times is reporting today that Spain is already prepared to make a formal rescue request from the ECB/ESM but that the request is being delayed by an attempt to resolve issues related to the impact on other countries such as Italy.
- The German Oct Zew economic sentiment index rose to -11.5 from -18.2 in September and was stronger than market expectations of -14.9. That report on investor and analyst sentiment indicates improved confidence tied to the ECB's bond-buying program and the subsequent drop in Spanish and Italian bond yields. The Oct current situation index, however, of 10.0 fell from September's 12.6 and was weaker than market expectations of 11.8.
- The Eurozone Oct Zew economic sentiment index improved to -1.4 from -3.8 in September.
- The Eurozone Sep CPI report of +0.7% m/m and +2.6% y/y was in line with market expectations. The Sep year-on-year figure of +2.6% y/y was down slightly from +2.7% in August.
- The Eurozone Aug trade surplus (sa) widened to 9.9 billion euros from a revised 7.2 billion euros in July and was wider than market expectations of 8.2 billion euros. The report was supportive for EUR/USD.
- Spain today successfully sold 4.86 billion euros of 12-month and 18-month securities, exceeding its intended 4.5 billion euro target. The bid cover ratios were 2.71 for the 12-month notes and 3.04 for the 18-month notes.
- EU27 Sep new car registrations fell -10.8% y/y from -8.9% y/y in August.
- The UK Sep CPI report of +0.4% m/m and +2.2% y/y was in line with market expectations and was down from Aug's +0.5% m/m and +2.5% y/y. The Sep core CPI was unchanged from Aug at +2.1% y/y and was in line with market expectations. The improved CPI report is a positive for the UK economy since it gives more flexibility on monetary policy to the Bank of England.
- Tokyo Sep condo sales fell to -9.3% y/y from +17.3% y/y in Aug. Market Comments
- Dec E-mini S&Ps this morning are mildly higher by +3.50 points (+0.24%). Supportive factors include the 0.98% rally in the Euro Stoxx 50 index, the improvement in the Zew confidence indexes for Germany and the Eurozone, and the rally in virtually all of the Asian stock markets today. The S&P 500 index on Monday closed with fairly sharp gains: S&P 500 +0.81%, Dow Jones +0.72%, Nasdaq 100 +0.73%. Bullish factors included the stronger-than-expected U.S. retail sales report, a 5.5% rally in Citigroup that followed its earnings report, and favorable Chinese exports and CPI reports. U.S. Sep retail sales rose +1.1% m/m, stronger than expectations of +0.8% and Aug retail sales were revised higher to +1.2% from +0.9%. Sep retail sales ex autos and gasoline showed a strong increase of +0.9% after the revised +0.3% increase in Aug. China's Sep exports were reported on Saturday at +9.9% y/y, stronger than market expectations of +5.5% and Aug's report of +2.7%.
- Dec 10-year T-notes this morning are down 5 ticks on reduced safe-haven demand with the rally in global stocks. Dec 10-year T-note prices on Monday closed little changed: TYZ2 unch, FVZ2 +0.5. T-notes were undercut by the strong U.S. retail sales report and reduced safe-haven demand with the rally in stocks.
- The dollar index this morning is down -0.26 points (-0.32%) on reduced safe-haven demand with the rally in stocks.. EUR/USD is up +0.0064 (+0.49%) on the successful Spanish note sales today and the FT report that Spain is already prepared to request a credit line from the ECB/ESM bailout program. USD/JPY is up +0.24 (+0.31%). The dollar index on Monday closed slightly higher: Dollar index +0.08 (+0.09%), EUR/USD -0.0002 (-0.02%), USD/JPY +0.21 (+0.27%). The dollar received support from the stronger-than-expected U.S. retail sales report of +1.2% and uncertainty about EUR/USD going into the EU Summit on Thursday and Friday.
- Nov WTI crude oil prices this morning are up +0.10 (+0.11%) and Nov gasoline is up +0.0063 (+0.22%). Nov crude oil and gasoline prices closed lower on Monday: CLX2 -0.01 (-0.01%), RBX2 -0.0425 (-1.47%). Bearish factors included expectations for a 1.5 million barrel rise in U.S. crude oil inventories in Wednesday's DOE report and technical selling in gasoline prices, which hit a 1-1/2 week low. The market consensus for Wednesday's DOE report is for a 1.5 million barrel increase in crude oil inventories due to high U.S. oil production and an increase in crude oil imports, a 250,000 barrel increase in gasoline inventories, a 1.25 million barrel decline in distillate inventories, and a 0.3 point increase to 87.0% in the refinery utilization rate.
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Global Financial Calendar
Tuesday 10/16/12 United States 0745 ET ICSC (Int'l Council of Shopping Centers) weekly retailer sales. 0830 ET Sep CPI expected +0.5% and +1.9% y/y, Aug +0.6% m/m and +1.7% y/y. Sep core CPI expected +0.2% and +2.0% y/y, Aug +0.1% m/m and +1.9% y/y. 0855 ET Redbook weekly retailer sales. 0915 ET Sep industrial production expected +0.2% m/m, Aug -1.2% m/m. Sep manufacturing production expected +0.3% m/m, Aug -0.7% m/m. Sep capacity utilization expected +0.1 to 78.3%, Aug 78.2%. 1000 ET Oct NAHB housing market index expected +1 to 41, Sep +3 to 40. 1130 ET Weekly 4-week T-bill auction. 1200 ET Federal Reserve Governor Sarah Bloom Raskin speaks on financial regulation at Suffolk University in Boston. 1200 ET Atlanta Fed President Dennis Lockhart introduces Argentine ambassador before the World Affairs Council of Atlanta at the Commerce Club. 1630 ET API weekly U.S. oil statistics. 2100 ET Obama-Romney debate at Hofstra University in Hempstead, NY. Town hall style meeting including foreign and domestic policy. Japan 0000 ET Tokyo Sep condo sales, Aug +17.3% y/y. Euro-Zone 0200 ET EU27 Sep new car registrations, Aug -8.9% y/y. 0500 ET Eurozone Sep CPI expected +0.7% m/m and +2.7% y/y, Aug +0.4% m/m and +2.7% y/y. Sep core CPI expected +1.6% y/y, Aug +1.5% y/y. 0500 ET Eurozone Aug trade balance (sa) expected 8.2 bln euros, July 7.9 bln euros. 0500 ET Eurozone Oct Zew economic sentiment index, Sep -3.8. Germany 0500 ET German Oct Zew survey current situation index expected 11.8, Sep 12.6. Oct Zew economic sentiment index expected -14.9, Sep -18.2. United Kingdom 0430 ET UK Aug ONS house price expected +1.9% y/y, July +2.0% y/y. 0430 ET UK Sep PPI input (nsa) expected +0.2% m/m and -0.6% y/y, Aug +2.0% m/m and +1.4% y/y. 0430 ET Sep PPI output (nsa) expected +0.3% m/m and +2.2% y/y, Aug +0.5% m/m and +2.2% y/y. Sep PPI output core (nsa) expected +0.1% m/m and +1.0% y/y, Aug +0.1% m/m and +1.2% y/y. 0430 ET UK Sep CPI expected +0.4% m/m and +2.2% y/y, Aug +0.5% m/m and +2.5% y/y. Sep core CPI expected +2.1% y/y, Aug +2.1% y/y. 0430 ET UK Sep RPI expected +0.5% m/m and +2.6% y/y, Aug +0.4% m/m and +2.9% y/y. Sep RPI ex-mortgage interest payments expected +2.6% y/y, Aug +2.9% y/y.
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