Morning Call For March 28, 2016

OVERNIGHT MARKETS AND NEWS

Jun E-mini S&Ps (ESM16 +0.23%) are up +0.28% after last Friday’s data showed the U.S. economy expanded more than expected in Q1. European markets are closed for Easter Monday. Also, May crude is up +0.51%, which is giving a boost to energy producing stocks. San Francisco Fed President Williams said that global developments were “the real issue” for policy makers as they decide on the pace of rate hikes. Asian stocks settled mixed: Japan +0.77%, Hong Kong and Australia closed for holiday, China -0.73%, Taiwan -0.17%, Singapore -0.60%, South Korea +0.07%, India -1.46%. China’s Shanghai Composite fell to a 1-week low after the China Q1 Beige Book stated that the Chinese economy was still “emanating weakness.” Japan’s Nikkei Stock index rallied to a 1-week high after the Sankei newspaper reported that Prime Minister Abe plans to delay the scheduled April 2017 consumption-tax increase to 10% from 8%.

The dollar index (DXY00 +0.01%) is up +0.01% at a 1-week high. EUR/USD (^EURUSD) is down -0.04%. USD/JPY (^USDJPY) is up +0.42% at a 1-week high.

Jun T-note prices (ZNM16 -0.15%) are down -6 ticks.

San Francisco Fed President Williams said the U.S. economy is doing “quite well” and “the real issue is the global financial and economic developments” for policy makers as they deliberate on the pace of interest rate increases.

U.S. Q4 GDP was revised upward to 1.4% (q/q annualized) from 1.0% (q/q annualized), stronger than expectations of no change at 1.0%. Q4 personal consumption was revised upward to 2.4% from the previously reported 2.0%.

ECB Governing Council member Knot said that further expansion of the ECB asset purchase program will lead to increased tensions over the prohibition of monetary financing as quantitative easing leads to “higher risks of undesirable side effects like bubbles, an unhealthy search for yield, a rolling over of problematic loans, increasing wealth inequality, and an addiction to low interest rates.”