Morning Call For Monday, Oct. 16

OVERNIGHT MARKETS AND NEWS

Dec E-mini S&Ps (ESZ17 unch) this morning are up +0.04% at a new all-time nearest-futures high and European stocks are also up +0.04%. Strength in commodity producing stocks is lifting the overall market with Nov WTI crude oil (CLX17 +1.32%) up +1.38% at a 2-week high and Dec COMEX copper (HGZ17 +2.71%) up +2.79% at a 3-year high. Crude oil rallied on concern that tensions between Iraq and Kurdish forces may disrupt crude oil flows after Iraqi soldiers seized facilities including a refinery near the city of Kirkuk from Kurdish forces. Copper prices soared on fund buying spurred on by speculation that Chinese demand for commodities will firm after China Sep producer prices rose +6.9% y/y, the fastest pace of increase in 6-months. Dec COMEX gold (GCZ17 +0.27%) is up +0.25% at a 2-week high after comments from Fed Chair Yellen Saturday boosted demand for gold as an inflation hedge when she said her “best guess” is that consumer prices will soon accelerate after a period of surprising softness. Asian stocks settled mostly higher: Japan +0.47%, Hong Kong +0.76%, China -0.36%, Taiwan +0.47%, Australia +0.56%, Singapore +0.12%, South Korea +0.14%, India +0.62%. Japan’s Nikkei Stock Index rallied to a 2-year high on signs the BOJ will keep its overly easy monetary policies in place after BOJ Governor Kuroda said, “the BOJ will persistently pursue aggressive monetary easing” in its attempts to boost inflation.

The dollar index (DXY00 +0.04%) is up +0.08% after Fed Chair Yellen said that “the ongoing strength of the economy will warrant gradual increases” in the Fed funds rate. EUR/USD (^EURUSD) is down -0.14%. USD/JPY (^USDJPY) is down -0.04%.

Dec 10-year T-note prices (ZNZ17 unch) are down -0.5 of a tick.

Fed Chair Yellen said Saturday that her “best guess” is that consumer prices will soon accelerate after a period of surprising softness and that “these soft readings will not persist” and that “the ongoing strength of the economy will warrant gradual increases” in the Fed funds rate.