Morning Call For Thursday, July 13

OVERNIGHT MARKETS AND NEWS

Sep E-mini S&Ps (ESU17 +0.08%) this morning are up +0.14% and European stocks are up +0.61%, both at 2-week highs after Fed Chair Yellen signaled yesterday that the Fed will be in no rush to raise interest rates as they wait to see if inflation picks up later this year. Signs of growth in the global economy are another bullish factor for stocks after Chinese trade data showed China Jun exports and imports both rose more than expected. Asian stocks settled higher: Japan +0.01%, Hong Kong +1.167%, China +.64%, Taiwan +0.38%, Australia +1.11%, Singapore +0.83%, South Korea +0.88%, India +0.73%.

The dollar index (DXY00 +0.02%) is up +0.05 and rebounded from a 9-1/4 month low in overnight trade. The dollar was under pressure from Wednesday’s comments on inflation from Fed Chair Yellen that curbed expectations on the pace of future Fed rate hikes. EUR/USD (^EURUSD) is down -0.22% after ECB Governing Council member Rimsevics said QE will continue for “a few years.” USD/JPY (^USDJPY) is down -0.14% at a 1-week low.

Sep 10-year T-note prices (ZNU17 +0.06%) are up +5 ticks.

ECB Governing Council Member Rimsevics said that the inflation forecast is still far from the ECB’s goal and that QE will continue for “a few years.”

The China Jun trade balance was in surplus by $42.8 billion, wider than expectations of $42.6 billion and the largest surplus in 5-months. Jun exports rose +11.3% y/y, stronger than expectations of +8.9% y/y. Jun imports rose +17.2% y/y, stronger than expectations of +14.5% y/y.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly initial unemployment claims (expected -3,000 to 245,000, previous +4,000 to 248,000) and continuing claims (expected -6,000 to 1.950 million, previous +13,000 to 1.956 million), (2) Jun PPI final demand (expected unch m/m and +1.9% y/y, May unch m/m and +2.4% y/y) and Jun PPI ex food & energy (expected +0.2% m/m and +2.0% y/y, May +0.3% m/m and +2.1% y/y), (3) Fed Chair Yellen appears before Senate Banking Committee on the second day of her semi-annual testimony to Congress, (4) Fed Governor Lael Brainard speaks on monetary policy at the National Bureau of Economic Research Monetary Economics Seminar Institute, (5) Treasury auctions $12 billion of 30-year T-bonds, (6) Jun monthly budget statement (expected -$31.0 billion, May -$88.426 billion), (7) USDA weekly Export Sales.