Overnight Markets And News

Jun E-mini S&Ps (ESM18 +1.19%) this morning are up sharply by +1.23% and European stocks are up +0.49% as concerns eased over a China/U.S. trade war. The WSJ reported that unidentified people with knowledge of the matter said China and the U.S. have quietly started negotiations to improve U.S. access to Chinese markets. The talks are led by U.S. Treasury Secretary Mnuchin and U.S. trade representative Lighthizer and Chinese President Jinping’s top economic aid Liu He. On a Sunday news show, Treasury Secretary Mnuchin said he’s “cautiously hopeful” that China will reach a deal to avoid tariffs. Asian stocks settled mixed: Japan +0.72%, Hong Kong +0.79%, China -0.60%, Taiwan +0.15%, Australia -0.52%, Singapore -0.26%, South Korea +0.79%, India +1.44%. China’s Shanghai Composite fell to a 1-1/2 month low, although closed well above its lows, and Japan’s Nikkei Stock Index rebounded from a 5-3/4 month low and closed higher on optimism the U.S. and China can reach an agreement over trade tariffs.

The dollar index (DXY00 -0.23%) is down -0.23% at a 5-week low. EUR/USD (^EURUSD +0.49%) is up +0.50% at a 2-week high. USD/JPY (^USDJPY +0.36%) is up +0.37%.

Jun 10-year T-note prices (ZNM18 -0-050) are down -4.5 ticks.

ECB Governing Council member Weidmann said, “the end of net asset purchases is only the beginning of a monetary-policy normalization process that will take several years, and that’s why it’s particularly important to start soon.” He added that market expectations for the end of bond buying in 2018 and forecasts for the first interest-rate increase in the middle of 2019 are “not unrealistic.”

U.S. Stock Preview

Key U.S. news today includes: (1) Feb Chicago Fed national activity index (expected +0.03 to 0.15, Jan -0.02 to 0.12), (2) Mar Dallas Fed manufacturing activity (expected -3.7 to 33.5, Feb +3.8 to 37.2), (3) USDA weekly grain export inspections, (4) New York Fed President William Dudley (voter) speaks to the U.S. Chamber of Commerce in Washington on the future of financial regulation, (5) Treasury auctions $30 billion of 2-year T-notes, (6) Cleveland Fed President Loretta Mester (voter) speaks on monetary policy at Princeton University, (7) Fed Vice Chair Randal Quarles speaks at the Hope Global Forums meeting n Atlanta.