Morning Call For Thursday, July 20

OVERNIGHT MARKETS AND NEWS

Sep E-mini S&Ps (ESU17 +0.03%) this morning are up +0.05% at a fresh all-time nearest-futures high. European stocks are up +0.36% ahead of the conclusion of the 2-day ECB policy meeting and press conference from ECB President Draghi. Signs of strength in the global economy are positive for world stock prices after Japan Jun exports rose more than expected and after the BOJ raised its Japan 2017 GDP estimate to 1.8% from 1.6%. Asian stocks settled mostly higher: Japan +0.62%, Hong Kong +0.26%, China +0.43%, Taiwan -0.06%, Australia +0.51%, Singapore -0.96%, South Korea +0.53%, India -0.16%. Asian stocks settled higher on the heels of a rally in U.S. stocks Wednesday to all-time highs with China’s Shanghai Composite climbing to a 3-month high. Japanese stocks gained after the BOJ maintained its QE program and pushed back the projected timing for reaching its 2.0% target for the sixth time.

The dollar index (DXY00 +0.30%) is up +0.24%. EUR/USD (^EURUSD) is down -0.04%. USD/JPY (^USDJPY) is up +0.28% after the BOJ cut its 2017 core inflation estimate to 1.1% from 1.4% and said it now expects to hit its 2.0% inflation target around the fiscal year starting Apr 2019, a year later than a previous projection.

Sep 10-year T-note prices (ZNU17 -0.04%) are down -1 tick.

The BOJ in a 7-2 vote kept a -0.1% interest rate on balances in accounts held at the BOJ and said it will continue its annual purchases of 80 trillion yen in government bonds to keep the 10-year JGB yield at around zero %. The BOJ raised its 2017 Japan GDP estimate to 1.8% from 1.6%, but lowered its 2017 core inflation estimate to 1.1% from 1.4% and said it now expects to hit its 2.0% inflation target around the fiscal year starting Apr 2019, a year later than a previous projection and the sixth time it has pushed back the projected timing it would take to reach its 2.0% target.

The Japan Jun trade balance was in surplus by +439.9 billion yen, a smaller surplus than expectations of +488.00 billion yen. Jun exports rose +9.7% y/y, stronger than expectations of +9.5% y/y and Jun imports rose +15.5% y/y, stronger than expectations of +14.4% y/y.