Overnight Markets And News

Dec E-mini S&Ps (ESZ18 -0.25%) this morning are down -0.22% and European stocks are down -1.19% at a 1-week low as a sell-off in Italian bank stocks leads the overall market lower. Political risks in Italy are undercutting stocks after the Italian government agreed to set next year’s budget deficit target at 2.4% of GDP, above the EU’s budget limit of 2.0%. The Italian government now has to present its 2019 budget to the European Commission by mid-October for approval. The slump in European stocks boosted the safe-haven demand for German bunds as the 10-year bund yield fell to a 1-week low of 0.448%. Asian stocks settled mostly higher: Japan +1.36%, Hong Kong +0.26%, China +1.06%, Taiwan -0.25%, Australia +0.43%, Singapore +0.64%, South Korea -0.69%, India -0.27%. Japan’s Nikkei Stock index soared to a 26-3/4 year high on the strength of Japanese exporter stocks. Exporters rallied after USD/JPY (^USDJPY +0.06%) jumped to a 9-1/2 month high, which improves the earnings prospects of exporters with the weaker yen. Chinese stocks rallied on short-covering ahead of China’s week-long holiday that begins Monday.

The dollar index (DXY00 +0.43%) is up +0.46% at a 2-week high. EUR/USD (^EURUSD -0.50%) is down -0.54% at a 2-week low after an unexpected slowdown in Eurozone Sep core CPI prices bolstered speculation the ECB may by slow to tighten monetary policy. USD/JPY (^USDJPY +0.06%) is up +0.04% at a 9-1/2 month high as divergent central bank policies undercut the yen with the Fed raising interest rates as the BOJ continues its QE program.

Dec 10-year T-note prices (ZNZ18 +0-065) are up +6 ticks.

The Eurozone Sep CPI estimate rose +2.1% y/y, right on expectations and matched July as the fastest pace of increase in 5-3/4 years. The Sep core CPI rose +0.0% y/y, weaker than expectations of +1.1% y/y.

The German Sep unemployment change fell -23,000 to 2.303 million, stronger than expectations of -9,000. The Sep unemployment rate unexpectedly fell -0.1 to record low of 5.1% (data from 1990), better than expectations of no change at 5.2%.

UK Sep Gfk consumer confidence fell -2 to -9, weaker than expectations of -1 to -8