Morning Call For March 2, 2016

OVERNIGHT MARKETS AND NEWS

March E-mini S&Ps (ESH16 -0.14%) are down -0.28% as they follow crude oil prices lower, although European stocks are up +0.39% at a 1-month high as miners and commodity producers rallied and led the overall market higher after the price of copper jumped to a 3-1/2 month high. Crude oil is down -1.95% after data late yesterday from API showed U.S. crude inventories surged +9.9 million bbl last week. Asian stocks settled higher: Japan +4.11%, Hong Kong +3.07%, China +4.26%, Taiwan +0.69%, Australia +2.01%, Singapore +1.66%, South Korea +1.70%, India +1.95%. Chinese stocks rallied on speculation the government will announce measures to boost growth at legislative meetings that begin Saturday. China’s National People’s Congress will begin a 2-week meeting starting March 5 where delegates will sign off on a new 5-year economic plan. Japan’s Nikkei Stock Index climbed to a 3-week high as exporter stocks rallied after the yen fell to a 2-week low against eh dollar, which improves earnings prospects of exporters

The dollar index (DXY00 +0.10%) is up +0.10%. EUR/USD (^EURUSD) is down -0.12%. USD/JPY (^USDJPY) is up +0.32% at a 2-week high.

Jun T-note prices (ZNM16 -0.12%) are down -4 ticks at a 4-week low on hawkish comments from San Francisco Fed President Williams who said the U.S. economy is set to “power ahead.” which increases the chance of a Fed rate hike at the Mar 15-16 FOMC meeting.

In a telephone interview with the Financial Times, San Francisco Fed President Williams said “he doesn’t see any signs in the data of any slackening of domestic demand” and that the U.S. economy is set to “power ahead” and push inflation back to target as positive U.S. domestic demand outweighs weakness from abroad.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -4.3% with purchase sub-index +2.2% and refi sub-index -7.7%), (2) Feb ADP employment change (expected +188,000, Jan +205,000), (3) Feb New York ISM (Jan -7.4 to 54.6), (4) San Francisco Fed President John Williams’ speech at the Bishop Ranch Forum in San Ramon, CA, and (5) Fed Beige Book.