Morning Call For Thursday, August 31

OVERNIGHT MARKETS AND NEWS

Sep E-mini S&Ps (ESU17 +0.21%) this morning are up +0.24% at a 2-week high on signs of strength in the global economy after the China Aug manufacturing PMI unexpectedly strengthened. European stocks are up +0.73%, led by strength in mining stocks, as optimism in the global economic outlook lifts the price of Sep COMEX copper (HGU17 +0.91%) by +0.98% to a new 2-3/4 year high. The closure of most refineries along the Texas Gulf Coast from Tropical Storm Harvey continues to boost gasoline prices with nearest-futures Sep ROB gasoline (RBU17 +5.59%) up +2.06% to a fresh 2-year high. Asian stocks settled mixed: Japan +0.72%, Hong Kong -0.44%, China -0.08%, Taiwan +0.15%, Australia +0.79%, Singapore +0.37%, South Korea -0.44%, India +0.27%. Japan’s Nikkei Stock Index climbed to a 2-week high as exporter stocks rallied due to weakness in the yen after USD/JPY jumped to a 2-week high.

The dollar index (DXY00 +0.36%) is up +0.31%. EUR/USD (^EURUSD) is down -0.25% after a report from Reuters said that the recent surge in EUR/USD to a 2-1/2 year high is worrying some ECB members, which raises the chances that the ECB will be slow to taper QE. USD/JPY (^USDJPY) is up +0.33% at a 2-week high.

Sep 10-year T-note prices (ZNU17 -0.02%) are down -2.5 ticks.

The Eurozone Aug CPI estimate rose +1.5% y/y, stronger than expectations of +1.4% y/y. Aug core CPI rose +1.2% y/y, right on expectations.

The Eurozone Jul unemployment rate remained unch at 9.1%, right on expectations.

China Aug manufacturing PMI unexpectedly rose +0.3 to 51.7, stronger than expectations of -0.1 to 51.3.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Aug Challenger job cuts (Jul -37.6% y/y), (2) weekly initial unemployment claims (expected +4,000 to 238,000, previous +2,000 to 234,000) and continuing claims (expected -3,000 to 1.951 million, previous unch at 1.954 million), (3) Jul personal spending (expected +0.4%, Jun +0.1%) and Jul personal income (expected +0.3%, Jun unch), (4) Jul PCE deflator (expected +0.1% m/m and +1.4% y/y, Jun unch m/m and +1.4% y/y) and Jul core PCE deflator expected (+0.1% m/m and +1.4% y/y, Jun +0.1% m/m and +1.5% y/y), (5) Aug Chicago PMI (expected -0.4 to 58.5, Jul -6.8 to 58.9), (6) Jul pending home sales (expected +0.4% m/m and +0.5% y/y, Jun +1.5% m/m and +0.7% y/y), (7) USDA weekly Export Sales.