Barchart U.S. Morning Call
Wednesday, September 23, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is up +0.65% and Dec S&Ps are up +1.80 points. The dollar is little changed after extending its current downtrend to a new 1-year low and commodity prices are mixed. Europe's manufacturing and service industries expanded for a second month in Sep and suggest that the Euro-Zone economy is gathering strength. The Sep Euro-Zone PMI composite rose +0.4 to a 16-month high of 50.8, although lower than an expected increase of +0.9 to 51.3. Also helping to boost European share prices today was the larger-than-expected increase in the Sep French business confidence indicator which jumped +6 to an 11-month high of 85, its fifth consecutive month of improvement. Limiting stock gains in Europe was the unexpected decline in Aug French consumer spending which fell -1.0% m/m and -1.3% y/y as mounting job losses deterred consumers from spending. French Finance Minister Christine Lagarde said yesterday that her government will maintain its emergency measures to bolster the economy until joblessness begins to recede. IMF Managing Director Dominique Strauss-Kahn in an interview before the G-20 summit begins in Pittsburgh tomorrow warned that "it's too early to say the crisis is behind us," as he urged leaders from the G-20 nations to maintain their efforts to pull the world economy out of recession.
The Asian markets today closed mostly lower with Hong Kong -0.49%, China -2.27%, Taiwan -1.24%, Australia +1.51%, Singapore +0.01%, South Korea -0.26%, India -0.99%. Chinese central bank governor Zhou Xiaochuan said in an interview that currency stability was the most important goal of monetary policy, heeding calls from Chinese exporters to delay appreciation of the yuan. Zhou said China must stick to a moderately loose monetary stance, use policy tools flexibly and control inflation to keep the yuan stable. China has stalled the yuan's appreciation against the dollar since July of last year and exporters at a trade show in Shanghai today urged the government to continue to delay gains in the currency after Chinese exports dropped -23.4% in Aug y/y. The China News Service reported today that President Hu Jintao, speaking with US President Obama at a meeting yesterday, said the yuan's stability has been China's contribution to regional and global development during the financial crisis.
Overnight U.S. Stock News
December S&Ps this morning are trading up +1.80 points. The US stock market yesterday traded higher throughout the day and closed with modest gains (Dow +0.52%, S&P 500 +0.66%, Nasdaq Composite +0.39%). Bullish factors included (1) carry-over strength from a rally in Asian and European stock markets after the Asian Development Bank revised its 2009 growth forecast for Asia excluding Japan to +3.9%, up from a March forecast of +3.4%, (2) strength in technology stocks after Dramexchange Technology reported that the price of benchmark computer-memory chips rose 1.1% to a 13-month high, indicating increased demand, (3) the prediction from PNC Financial Services that "the stock rally will keep going and any correction will be muted" since there is a lot of cash on the sidelines, since coporate America has been very diligent on expenses, and since econmomic activity is improving globally, (4) the prediction from UK Prime Minister Brown that the global economy has yet to feel the full benefit of government stimulus programs, and (5) a rally in commodity and energy producers after the slide in the dollar index to a 1-year low boosted the prices of most commodities.
Bearish factors included (1) the smaller-than-expected increase in the July FHFA house price index along with the downward revision to the June house price index, (2) a slump in health-care stocks after Vice President Biden called for tougher regulation in the health insurance industry, (3) the prediction from CLSA Ltd. that US bank stocks are set to drop because loans made for commercial real estate will sour and require lenders to raise more capital to cover credit losses, and (4) the assertion from Citigroup that US stock prices have risen so fast since March that the ISM manufacturing index will have to rise above 70 by Q1 of 2010 to substantiate the current stock market rally.
Seagate Technology (STX) rose 1.4% in European trading after the world's largest maker of hard-disk drives predicted that industry-wide orders for hard drives should top an earlier forecast of 135 million to 140 million units and they raised their revenue guidance for the quarter ending Oct 3 to "be at or slightly" above the high end of a July forecast of $2.4 billion to $2.6 billion.
Today's Market Focus
December 10-year T-notes this morning are trading down -3 ticks ahead of the outcome of the 2-day FOMC meeting later today. Dec T-note prices yesterday recovered early losses and traded higher throughout the rest of the session and closed up +7 ticks. Bullish factors for T-note prices yesterday included (1) the weaker-than-expected Sep Richmond Fed manufacturing index (unchanged at 14 versus expectations of +2 to 16), (2) the smaller-than-expected increase in the July FHFA home price index along with the downward revision to June (July +0.3% m/m versus expectations of +0.5% and Jun revised down to +0.1% m/m from the previously reported +0.5% m/m), (3) a possible increase in the safe-haven demand for Treasuries after CLSA Ltd.'s prediction that US banks will need to raise more capital to cover credit losses as commercial real estate loans sour, and (4) the prediction from Goldman Sachs that the 10-year T-note yield may fall back to 3% because inflation will stay muted, Asian central banks will continue to buy government debt, and policy makers will delay stimulus-exit strategies. Bearish factors included (1) strength in global stock markets which sapped safe-haven demand for Treasuries, and (2) supply pressures ahead of Wednesday's $40 billion 5-year T-note auction.
The dollar index this morning is weaker after posting a fresh 1-year low with the dollar/yen +0.15 yen and the euro/dollar -0.05 cents. The dollar index yesterday tumbled and closed at a 1-year low. Bearish factors for the dollar included (1) a rally in most Asian currencies after the Asian Development Bank upgraded its 2009 Asian growth forecast excluding Japan to +3.9% from March's estimate of +3.4%, (2) the jump in the euro to a 1-year high against the dollar after euro-friendly comments from ECB Council member and Bundesbank President Axel Weber who said that the recent strengthening of the euro currency is consistent with economic developments in the Euro-Zone, (3) speculation that the Group of 20 leaders meeting in the US on Sep 24-25 will call for a reduction in global trade imbalances, which may cause further gains in currencies against the dollar, and (4) reduced safe-haven demand for the dollar as global equity markets rallied on optimism that the global recession is ending. Bullish factors included (1) euro-negative comments from ECB Council member Ivan Sramko that "there are still question marks over Euro-Zone growth despite the upward revisions," and there is a risk that Europe's economic recovery could wane and result in a double-dip recession, and (2) a possible increase in the safe-haven demand for the dollar after CLSA Ltd. predicted that US banks will need to raise more capital to cover credit losses.
November crude oil prices this morning are down -59 cents a barrel and Nov gasoline is trading -1.99 cents a gallon. Nov crude oil prices yesterday rallied and closed up +$1.83 a barrel. November gasoline closed up +3.75 cents a gallon. Bullish factors included (1) the slump in the dollar index to a 1-year low, bolstering demand for commodities as a hedge against inflation, (2) the +18% y/y increase in Aug China crude oil imports to 17.92 million metric tons, the second-highest level on record and a sign of strong energy demand, (3) the action by the Asian Development Bank to revise up its 2009 Asian growth estimate excluding Japan to +3.9% from its March estimate of 3.4%, which indicates increased fuel demand, and (4) expectations that the DOE will report that crude oil inventories fell for a fourth consecutive week when they are released Wednesday morning. Expectations for Wednesday's weekly DOE inventory report is for crude oil inventories to drop -1.4 million bbl, gasoline stockpiles to gain +500,000 bbl, distillate inventories to rise +1.4 million bbl, and the refinery capacity rate to fall -1.0 point to 85.9% as refiners slow production for annual seasonal maintenance.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) GIS-General Mills (BEST earnings consensus $1.03), PAYX-Paychex (0.34), BBBY-Bed Bath & Beyond (0.47.), AZO-Autozone (4.43), RHT-Red Hat (0.15), CTAS-Cintas (0.39), CPRT-Copart (0.43), CMTL-Comtech Telecommunications (0.20).
Global Financial Calendar
| Wednesday 9/23/2009 |
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| United States |
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| 0700 ET | Weekly MBA mortgage applications for the week ended Sep 18, previous -8.6% with purchase sub-index -10.0% and refinancing sub-index -7.4%. |
| 0930 ET | Treasury Secretary Timothy Geithner testifies to the House Financial Services Committee on regulatory reform. |
| 1300 ET | Treasury auctions $40 billion 5-year T-notes. |
| 1415 ET | FOMC announces interest rate decision (federal funds rate target expected unchanged at zero to 0.25%). |
| France |
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| 0245 ET | Aug French consumer spending expected +0.5% m/m and +1.4% y/y, Jul +1.4% m/m and +1.2% y/y. |
| 0250 ET | Sep French business confidence indicator expected +2 to 80, Aug +2 to 78. |
| 0300 ET | Sep French PMI manufacturing expected +0.5 to 51.3, Aug +2.7 to 50.8. |
| 0300 ET | Sep French PMI services expected +0.7 to 50.0, Aug +3.8 to 49.3. |
| Germany |
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| 0330 ET | Sep German PMI manufacturing expected +1.6 to 50.8, Aug +3.5 to 49.2. |
| 0330 ET | Sep German PMI services expected +0.2 to 54.0, Aug +5.7 to 53.8. |
| Euro-Zone |
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| 0400 ET | Sep Euro-Zone PMI composite expected +0.9 to 51.3, Aug +3.4 to 50.4. Sep PMI manufacturing expected +1.5 to 49.7, Aug +1.9 to 48.2. Sep PMI services expected +0.6 to 50.5, Aug +4.2 to 49.9. |
| 0500 ET | Jul Euro-Zone industrial new orders expected +2.0% m/m and -25.9% y/y, Jun +3.1% m/m and -25.1% y/y. |
| United Kingdom |
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| 0430 ET | Minutes of the Sep 10 BOE monetary policy meeting. |
| Japan |
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| n/a | Japanese markets closed for Autumnal Equinox Day. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1069.10 | 1.80 | 0.17% | 07:17:10 |
| DJIA (CBOT) (Z9) | 9783 | 12 | 0.12% | 07:13:43 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2488.10 | 15.96 | 0.65% | 07:13:15 |
| London UK FTSE Index | 5162.63 | 20.03 | 0.39% | 07:13:15 |
| German Dax Index | 5724.71 | 15.33 | 0.27% | 07:13:28 |
| French CAC 40 Index | 3832.36 | 8.84 | 0.23% | 07:13:15 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10371 | 0 | 0.00% | 9/18/2009 |
| Hong Kong Hang Seng | 21596 | -106 | -0.49% | 04:01:30 |
| China CSI 300 Index | 3060 | -71 | -2.27% | 03:01:05 |
| Taiwan TAIEX Index | 7377 | -92 | -1.24% | 01:46:01 |
| Australian S&P 200 | 4734.1 | 70.4 | 1.51% | 02:47:03 |
| Singapore Str. Times | 2685.94 | 0.31 | 0.01% | 05:10:01 |
| South Korea KOSPI 200 | 224.69 | -0.58 | -0.26% | 05:03:26 |
| Bombay Sensex 30 | 16720 | -166.93 | -0.99% | 06:29:57 |
| Karachi KSE-100 | 9437 | 0 | 0.00% | 9/18/2009 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.880 | -0.030 | -0.08% | 07:17:55 |
| Cash 10yr T-note Price | 101.100 | -0.060 | -0.18% | 07:24:31 |
| Cash 10yr T-note Yield | 3.467 | 0.022 | 0.65% | 07:24 |
| 5yr T-note (CBT)(Z9) | 115.090 | -0.015 | -0.04% | 07:17:42 |
| Cash 5yr T-note Price | 99.225 | -0.035 | -0.11% | 07:24:31 |
| Cash 5yr T-note Yield | 2.439 | 0.024 | 0.98% | 07:24 |
| 30-yr T-bond (CBT)(Z9) | 119.63 | -0.05 | -0.13% | 07:17:42 |
| Cash 30yr T-bond Price | 104.245 | -0.120 | -0.36% | 07:25:30 |
| Cash 30yr T-bond Yield | 4.218 | 0.021 | 0.51% | 07:25 |
| Eurodollars (CME)(Z9) | 99.565 | 0.000 | 0.00% | 07:16:29 |
| Eurodollars (CME)(H0) | 99.350 | -0.005 | -0.01% | 07:17:48 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 138.55 | 0.00 | 0.00% | 9/18/2009 |
| EuroyenTibor(SGX)(Z9) | 99.520 | 0.000 | 0.00% | 08:10:35 |
| Bunds (Eurex) (Z9) | 120.09 | -0.15 | -0.12% | 07:13:26 |
| Euribor (Eurex) (Z9) | 99.28 | 0.01 | 0.01% | 05:05:07 |
| UK Gilts (Liffe) (Z9) | 116.59 | -0.15 | -0.13% | 07:13:06 |
| Short Stlg (Liffe) (Z9) | 99.47 | -0.02 | -0.02% | 07:13:01 |
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| Forex |
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| U.S. Dollar Index | 76.11 | -0.01 | -0.01% | 07:18:25 |
| US Dollar-Japanese Yen | 91.25 | 0.15 | 0.16% | 07:28:29 |
| EuroFX-US Dollar | 1.4785 | -0.0005 | -0.05% | 07:28:29 |
| US Dollar-Swiss Franc | 1.0229 | -0.0008 | -0.08% | 07:28:29 |
| British Pound-US$ | 1.6436 | 0.0077 | 0.77% | 07:28:29 |
| US$-Canadian Dlr | 1.0693 | 0.0001 | 0.01% | 07:28:29 |
| Yen (Globex) (Z9) | 1.0956 | -0.0009 | -0.09% | 07:18:27 |
| Euro FX (Globex) (Z9) | 1.478 | -0.001 | -0.07% | 07:18:14 |
| SwissFranc (Globex)(Z9) | 0.978 | 0.0008 | 0.08% | 07:18:05 |
| British Pound(Glbx)(Z9) | 1.6428 | 0.0078 | 0.48% | 07:18:26 |
| Canadian$ (Globex)(Z9) | 0.9363 | 0.0005 | 0.05% | 07:18:22 |
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| Commodities |
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| Gold (Comex) (Z9) | 1015.3 | -0.2 | -0.02% | 07:18:20 |
| Silver (Comex) (Z9) | 17.130 | 0.015 | 0.09% | 07:18:07 |
| Copper (Comex) (Z9) | 278.9 | -7.6 | -2.64% | 07:18:04 |
| Crude Oil (Nymex) (X9) | 71.17 | -0.59 | -0.82% | 07:18:10 |
| Gasoline (Nymex) (X9) | 177.6 | -1.99 | -1.11% | 07:00:00 |
| Heating Oil(Nymex) (X9) | 183.39 | -0.97 | -0.53% | 07:17:12 |
| NaturalGas(Nymex)(X9) | 4.547 | 0.027 | 0.60% | 07:17:16 |
| Corn (CBOT) (Z9) | 321.50 | -4.25 | -1.30% | 07:17:57 |
| Soybeans (CBOT) (X9) | 909.00 | -13.00 | -1.41% | 07:15:47 |
| Wheat (CBOT) (Z9) | 454.50 | -1.25 | -0.27% | 07:18:11 |
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About the author
Get Barchart U.S. Morning Call delivered to your email inbox! Sign up for free here. Barchart U.S. Morning Call is written by the experienced members of the Commodity Research Bureau and the Barchart Research Team. Commodity Research Bureau (CRB) has been providing research to the financial and commodity community since 1934. If you have any questions for our analysts, please contact us at support@crbtrader.com. Sent every morning, "Morning Call" summarizes overnight global market news, along with a U.S. market forecast for the day ahead. It Includes upcoming earnings reports, a global financial calendar, and quote board overview of where the markets are standing.
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