Morning Call For February 25, 2016

OVERNIGHT MARKETS AND NEWS

March E-mini S&Ps (ESH16 +0.14%) are little changed, up +0.13%. Crude oil prices are down -0.47%, which has drug energy producers and service companies lower with Transocean Ltd. and Kinder Morgan both down at last 1.2% in pre-market trading. Also, a -6.41% plunge in China’s Shanghai Composite to a 1-week low undercut stocks after a surge in money-market rates indicated tighter liquidity as China’s overnight repurchase rate climbed 14 bp to 2.11%, the largest increase in almost 3 weeks. European stocks are up +1.81% after the Eurozone Jan CPI was revised lower, which bolsters the case for the ECB to expand stimulus when it meets next month. Asian stocks settled mixed: Japan +1.41%, Hong Kong -1.58%, China -6.41%, Taiwan +1.00%, Australia +0.13%, Singapore -0.63%, South Korea +0.20%, India -0.49%. U.S Treasury Secretary Lew said that G-20 finance ministers won’t deliver an “emergency response” to the recent market turmoil when they meet in Shanghai for a 2-day meeting Friday and Saturday as we aren’t in a crisis environment.

The dollar index (DXY00 -0.15%) is down -0.05%. EUR/USD (^EURUSD) is up +0.15%. USD/JPY (^USDJPY) is up +0.20%.

Mar T-note prices (ZNH16 +0.07%) are up +3 ticks.

St. Louis Fed President Bullard said there’s “too much talk about negative interest rates” and that he doesn’t see recession risk rising in the U.S. He added, that the U.S Jan CPI report was “hot” and that he expects inflation expectations to stabilize.

The Eurozone Jan CPI was revised downward to +0.3% y/y from the originally reported +0.4% y/y. The Jan core CPI was left unchanged at +1.0% y/y.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Atlanta Fed President Dennis Lockhart’s opening remarks at the Atlanta Fed’s 2016 Banking Outlook Conference, (2) weekly initial unemployment claims (expected +8,000 to 270,000, previous -7,000 to 262,000) and continuing claims (expected -20,000 to 2.253 million, previous +30,000 to 2.273 million), (3) Jan durable goods orders (expected +2.7% and +0.3% ex transportation, Dec -5.0% and -1.0% ex transportation), (4) Dec FHFA house price index (expected +0.5% m/m, Nov +0.5% m/m), (5) Feb Kansas City Fed manufacturing activity (expected +3 to-6, Jan unch at -9), (6) San Francisco Fed President John Williams’ speech at NYU Stern Business School, and (7) the Treasury’s auction of $28 billion of 7-year T-notes.