Morning Call For Wednesday, Sept. 12

Overnight Markets And News

Sep E-mini S&Ps (ESU18 -0.03%) this morning are up +0.06% on strength in energy stocks and optimism a trade deal with Canada can be reached. Energy stocks rose with Oct WTI crude oil (CLV18 +0.81%) up +0.88% at a 1-week high on signs of tighter supplies after API data late Tuesday showed U.S. crude inventories fell -8.64 million bbl last week. Positive trade news also bolstered stocks after Reuters reported that Canada is ready to offer the U.S. limited access to Canada’s dairy markets, one of the current sticking points in trade negotiations, in order to help forge a new NAFTA deal. European stocks are up +0.20%, although gains were limited after people with knowledge of the matter said the ECB will lower its Eurozone economic growth forecasts for this year at tomorrow’s ECB meeting. Asian stocks settled mostly lower: Japan -0.27%, Hong Kong -0.29%, China -0.33%, Taiwan -0.28%, Australia -0.06%, Singapore +0.47%, South Korea -0.04%, India +0.81%. China’s Shanghai Composite fell to a new 2-1/2 year low as trade concerns continue to weigh on Chinese stocks. Also, the government’s push to cut leverage in the financial system has triggered higher default rates and tighter liquidity, which is seen is today’s credit data that shows China Aug new yuan loans rose less than expected.

The dollar index (DXY00 -0.01%) is down -0.03%. EUR/USD (^EURUSD -0.19%) is down -0.19%. USD/JPY (^USDJPY-0.10%) is down -0.11%.

Dec 10-year T-note prices (ZNZ18 +0-030) are up +2.5 ticks.

Eurozone Jul industrial production fell -0.8% m/m, weaker than expectations of -0.5% m/m.

China Aug new yuan loans increased by +1.28 trillion yuan, weaker than expectations of +1.40 trillion yuan. Aug aggregate financing rose +1.52 trillion yuan, stronger than expectations of +1.30 trillion yuan.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -0.1% to 343.5 with purchase sub-index up +0.6% to 231.4 and refi sub-index down -1.4% to 940.0), (2) Aug PPI final demand (expected +0.2% m/m and +3.2% y/y, Jul unch m/m and +3.3% y/y) and Aug PPI ex food & energy (expected +0.2% m/m and +2.7% y/y, Jul +0.1% m/m and +2.7% y/y), (3) St. Louis Fed President James Bullard (non-voter) speaks to the CFA Society of Chicago, (4) EIA weekly Petroleum Status Report, (5) Fed Governor Lael Brainard speaks at the Detroit Economic Club Luncheon about the economy and monetary policy, (6) Treasury auctions $23 billion 10-year T-notes, (7) Fed Beige Book.