Morning Call For December 10, 2015

OVERNIGHT MARKETS AND NEWS

December E-mini S&Ps (ESZ15 +0.24%) are up +0.29% on speculation the U.S. economy is strong enough to handle a Fed interest rate increase next week and European stocks are down -0.21% at a 1-1/2 month low as weakness in oil prices drags down energy producers. As expected, the BOE maintained its benchmark interest rate at 0.50% and kept its asset purchase target at 375 billion pounds following today’s policy meeting. Asian stocks settled mostly lower: Japan -1.32%, Hong Kong -0.45%, China -0.49%, Taiwan -0.16%, Australia -0.84%, Singapore -0.44%, South Korea +0.50%, India +0.86%. Asian stocks fell back on the heels of Wednesday’s losses in U.S. stocks. Japan’s Nikkei Stock Index dropped to a 1-month low as exporters retreated after the yen climbed to a 1-month high against the dollar and dampened the earnings prospects of exporters.

The dollar index (DXY00 +0.43%) is up +0.39%. EUR/USD (^EURUSD) is down -0.67% on dovish comments from ECB Governing Council members Liikanen and Jazbec who both said the ECB will do everything within its mandate to fulfill its inflation target. USD/JPY (^USDJPY) is down -0.01%.

Mar T-note prices (ZNH16 -0.02%) are down -2.5 ticks.

ECB Governing Council member Liikanen said the ECB has readiness to use more measures if needed and we “can go beyond Mar 2017 if necessary or at least until we have achieved our price stability targets.”

ECB Governing Council member Jazbec said the ECB will “do everything” to fulfill its mandate on inflation.

Japan Nov PPI fell -0.1% m/m and -3.6% y/y, a slower pace of decline than expectations of -0.3% m/m and -3.8% y/y.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly initial unemployment claims (expected unch at 269,000, previous +9,000 to 269,000) and continuing claims (expected -6,000 to 2.155 million, previous +6,000 to 2.161 million), (2) Nov import price index (expected -0.8% m/m and -9.6% y/y, Oct -0.5% m/m and-10.5% y/y), (3) the Treasury’s auction of $13 billion of 30-year T-bonds, (4) Nov monthly budget statement (expected -$68.0 billion, Oct -$136.532 billion).