Overnight Markets And News

Sep E-mini S&Ps (ESU18 -0.28%) this morning are down -0.30% at a 1-week low and European stocks are down -0.70% at a 1-1/4 month low on concern of contagion of the Turkey economic crisis to European banks. Losses in European bank stocks led the overall market lower as the Turkish lira plunged to a record low of 7.2362 against the dollar and the 2-year yield on Turkey’s government bond soared to a 10-year high of 25.7%. The lira recovered from its worst levels but was still down more than 7% after Turkey’s central bank took steps to boost liquidity. Investors flocked into the safety of government bonds due to the Turkish financial crisis as the 10-year yield on the German bund fell to a 5-week low of 0.306%. A 10% plunge in Bayer AG also undercut European stocks after Bayer’s newly acquired Monsanto was found liable by a San Francisco state court late Friday and ordered to pay $250 million in punitive damages and $39 million in compensatory damages after the jury decided that Monsanto’s Roundup weed killer caused a California’s groundskeeper’s cancer. Asian stocks settled lower: Japan -1.98%, Hong Kong -1.52%, China -0.34%, Taiwan -2.14%, Australia -0.42%, Singapore -1.20%, South Korea -1.29%, India -0.59%, Turkey 04.14%. USD/JPY tumbled to a 1-1/2 month low and spurred losses in Japanese exporter stocks that helped push Japan’s Nikkei Stock Index down to a 1-month low.

The dollar index (DXY00 +0.11%) is up +0.10% at a 13-1/2 month high. EUR/USD (^EURUSD -0.29%) is down -0.32% at a 13-1/4 month low on concern about European banks’ exposure to Turkey. USD/JPY (^USDJPY -0.42%) is down -0.39% at a 1-1/2 month high as The Turkish crises fueled safe-haven demand for the yen.

Sep 10-year T-note prices (ZNU18 +0-025) are little changed, down -0.5 of a tick.

Turkey’s central bank raised the collateral forex deposit limits for Turkish lira transactions to 20 billion euros from 7.2 billion euros. The central bank also said banks’ current foreign exchange deposit limits of around $50 billion may be increased and utilization limits may be improved if deemed necessary.