OVERNIGHT MARKETS AND NEWS

Jun E-mini S&Ps (ESM17 -0.16%) this morning are down -0.07% as geopolitical developments pressure stocks. North Korea warned of a nuclear strike if provoked and President Trump tweeted Tuesday that the U.S. was prepared to “solve the problem” of North Korea with or without China’s help. U.S. Secretary of State Tillerson is meeting Russian Foreign Minister Lavrov in Moscow after the Trump administration accused Russia of trying to cover up a chemical-weapons attack by Syria. Heightened geopolitical concerns have led to safe-haven buying of gold with Jun COMEX gold (GCM17 +0.16%) up +0.15% at a 5-month high. European stocks are up +0.08% at a 1-week high, led by strength in auto makers, after Daimler AG reported Q1 earnings before interest and taxes climbed to 4 billion euros from 2.15 billion euros a year earlier. Another positive for stocks is the +0.60% rally in May WTI crude oil (CLK17 +0.32%) to a 5-week high that boosted energy producing stocks after API data late Tuesday showed U.S. crude inventories fell -1.3 million bbl last week. Asian stocks settled mixed: Japan -1.04%, Hong Kong +0.93%, China -0.46%, Taiwan -0.15%, Australia +0.08%, Singapore +0.35%, South Korea +0.26%, India -0.49%. A sell-off in exporter stocks pushed Japan’s Nikkei Stock Index down to a 4-month low as USD/JPY fell to a 4-3/4 month low, which reduces the earnings prospects of exporters.

The dollar index (DXY00 +0.01%) is up +0.01%. EUR/USD (^EURUSD) is down -0.02%. USD/JPY (^USDJPY) is unchanged.

Jun 10-year T-note prices (ZNM17 +0.01%) are unchanged.

China Mar CPI rose +0.9% y/y, weaker than expectations of +1.0% y/y. Mar PPI rose +7.6% y/y, stronger than expectations of +7.5% y/y.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -1.6% with purchase sub-index +0.7% and refi sub-index -4.2%), (2) Mar import price index (expected -0.2% m/m and +3.9% y/y, Feb +0.2% m/m and +4.6% y/y), (3) Treasury auctions $12 billion 30-year T-bonds, (4) Mar monthly budget statement (expected -$167.0 billion, Feb -$108.0 billion), (5) EIA Weekly Petroleum Status Report.

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