OVERNIGHT MARKETS AND NEWS

December E-mini S&Ps (ESZ15 +0.35%) are up +0.40% and European stocks are up +0.11% after Eurozone unemployment unexpectedly fell to a nearly 4 year low. A rally in British bank stocks is also lending support to the overall market after all seven major British lenders passed BOE stress tests. Asian stocks settled higher: Japan +1.34%, Hong Kong +1.75%, China +0.32%, Taiwan +1.71%, Australia +1.93%, Singapore +0.50%, South Korea +1.83%, India +0.09%. Japan’s Nikkei Stock Index rallied up to a 3-1/4 month high after Japan Q3 capital spending rose by the most in over 8 years. China’s Shanghai Composite had opened lower after a gauge of Chinese manufacturing activity contracted by the most in over 3 years, but Chinese stocks erased their losses and closed higher as property stocks rallied on speculation the PBOC will loosen monetary policy further.

The dollar index (DXY00 -0.17%) is down 0.16%. EUR/USD (^EURUSD) is up +0.29%. USD/JPY (^USDJPY) is up +0.01%.

Mar T-note prices (ZNH16 -0.12%) are down -5.5 ticks.

The Eurozone Oct unemployment rate unexpectedly fell -0.1 to 10.7%, better than expectations of no change at 10.8% and the lowest in nearly 4 years.

The China Nov manufacturing PMI unexpectedly fell -0.2 to 49.6, weaker than expectations of no change at 49.8 and the steepest pace of contraction in 3-1/4 years. The Nov non-manufacturing PMI rose +0.5 to 53.6.

Japan Q3 capital spending rose +11.2% y/y, stronger than expectations of +2.2% y/y, and Q3 capital spending ex-software also rose +11.2% y/y, stronger than expectations of +1.7% y/y. Both increases were the largest since Q1 of 2007.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) final-Nov Markit manufacturing PMI (expected unrevised at 52.6, prelim-Nov -1.5 to 52.6), (2) Oct construction spending (expected +0.6%, Sep +0.6% m/m), (3) Nov ISM manufacturing index (expected +0.4 to 50.5, Oct -0.1 to 50.1), (4) a discussion by Chicago Fed President Charles Evans on the economic outlook and monetary policy at a Lansing Regional Chamber of Commerce Economic Club Luncheon, (5) Fed Governor Lael Brainard’s speechs on the ”Lower Neutral Rate and its Implications for Monetary Policy” at the Stanford Institute for Economic Policy Research Associates Meeting, and (6) Nov total vehicle sales (expected 18.10 million, Oct 18.12 million).

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