Morning Call For February 29, 2016

OVERNIGHT MARKETS AND NEWS

March E-mini S&Ps (ESH16 -0.08%) are down -0.18% and European stocks are down -0.49% after G-20 finance ministers meeting over the weekend in Shanghai disappointed financial markets by not coming up with coordinated stimulus to support the global economy. Weakness in bank stocks is leading the overall market lower with Goldman Sachs and Bank of America both down at least 1.1% in pre-market trading. Stock prices recovered from their worst levels, however, after China cut its reserve requirement ratio for banks by 50 bp to 17.00% from 17.50%. Asian stocks settled mostly lower: Japan -1.00%, Hong Kong -1.30%, China -2.86%, Taiwan closed for holiday, Australia +0.02%, Singapore +0.65%, South Korea -0.25%, India -0.66%. China’s Shanghai Composite fell to a 1-month low after G-20 officials failed to come up with a coordinated plan to boost global growth, while Japanese stocks also fell after the yen rallied against the dollar, which undercut exporter stocks.

The dollar index (DXY00 +0.15%) is up +0.17% at a 3-week high. EUR/USD (^EURUSD) is down -0.41% at a 4-week high after Eurozone CPI unexpectedly fell at the fastest pace in a year, which bolsters the case for the ECB to expand stimulus when it convenes next week. USD/JPY (^USDJPY) is down -0.95%.

Mar T-note prices (ZNH16 +0.04%) are up +3.5 ticks on carryover support from a rally in German bunds to a 10-1/4 month high after Eurozone Feb CPI unexpectedly fell by the most in a year.

After Chinese financial markets closed today, the PBOC cut the required reserve ratio for China’s biggest banks by 50 bp to 17.00% from 17.50%, effective March 1.

Eurozone Feb CPI unexpectedly fell -0.2% y/y, weaker than expectations of unch y/y and the fastest pace of decline in a year. Feb core CPI rose +0.7% y/y, weaker than expectations of +0.9% y/y and the smallest increase in 10 months.