Morning Call For Wednesday, Oct. 10

Overnight Markets And News

Dec E-mini S&Ps (ESZ18 +0.04%) this morning are down -0.04% and European stocks are down -0.23% as T-note yields move higher after New York Fed President Williams said “further gradual increases in interest rates” are the best way to foster a sustained expansion and also reduce risk-taking in financial markets. Supply pressures are also pushing up T-note yields ahead of today’s auctions of $36 billion in 3-year T-notes and $23 billion in 10-year T-notes. Asian stocks settled mostly higher: Japan +0.16%, Hong Kong +0.08%, China +0.18%, Taiwan closed for holiday, Australia +0.14%, Singapore -1.11%, South Korea -0.71%, India +1.35%. Chinese stocks edged higher on short covering and Japanese stocks gained after four days of losses when Japan Aug core machine orders rose more than expected, a sign of strength in business spending.

The dollar index (DXY00 -0.03%) is down -0.02%. EUR/USD (^EURUSD +0.13%) is up +0.08%. USD/JPY (^USDJPY+0.26%) is up +0.22%.

Dec 10-year T-note prices (ZNZ18 -0-055) are down -5 ticks.

New York Fed President Williams said “further gradual increases in interest rates” are the best way to foster a sustained expansion and also reduce risk-taking in financial markets.

UK Aug industrial production rose +0.2% m/m and +1.3% y/y, stronger than expectations of +0.1% m/m and +1.0% y/y.

UK Aug manufacturing production unexpectedly fell -0.2% m/m, weaker than expectations of +0.1% m/m.

UK Aug construction output fell -0.7% m/m, weaker than expectations of -0.5% m/m.

Japan Aug core machine orders rose +6.8% m/m and +12.6% y/y, stronger than expectations of -3.9% m/m and +1.8% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous unch at 352.6 with purchase sub-index +0.1% to 240.7 and refi sub-index -0.1% to 945.9), (2) Sep PPI final demand (expected +0.2% m/m and +2.7% y/y, Aug -0.1% m/m and +2.8% y/y) and Sep PPI ex food & energy (expected +0.2% m/m and +2.5% y/y, Aug -0.1% m/m and +2.3% y/y), (3) revised Aug wholesale inventories (prelim-Aug +0.8%) and Aug wholesale trade sales (Jul unch m/m), (4) Treasury auctions $36 billion of 3-year T-notes and $23 billion of 10-year T-notes, (5) Chicago Fed President Charles Evans (non-voter) speaks on the economy and monetary policy at the Flint & Genesee Chamber of Commerce Luncheon, (6) Atlanta Fed President Raphael Bostic (voter) discusses the economic outlook at a National Association of Corporate Directors event in Atlanta.