OVERNIGHT MARKETS AND NEWS

December E-mini S&Ps (ESZ15 -0.84%) are down -0.75% and European stocks are down -1.60% at a 1-month low as automakers fell, led by a -7.5% decline in BMW AG, after the German newspaper Autobild reported that diesel emissions from BMW’s X3 model exceeded EU pollution limits by as much as eleven times in a real-world road test. European stock losses were limited after German Sep IFO business confidence unexpectedly rose. Emerging market stocks fell and Norway’s krone tumbled 2% against the euro after the Norges Bank, Norway’s central bank, unexpectedly cut interest rates to a record low. Asian stocks closed mixed: Japan -2.76%, Hong Kong -0.97%, China +0.86%, Taiwan -0.86%), Australia +1.47%, Singapore closed for holiday, South Korea unchanged, India +0.16%. Japan’s Nikkei Stock Index fell to a 2-week low after Japanese markets reopened following a 3-day holiday. China’s Shanghai Composite closed higher as Chinese technology stocks rallied on speculation President Xi Jinping’s state visit to the U.S. will lead to higher exports.

The dollar index (DXY00 -0.25%) is down -0.17%. EUR/USD (^EURUSD) is up +0.37%. USD/JPY (^USDJPY) is down -0.56%.

Dec T-note prices (ZNZ15 +0.13%) are up +6 ticks.

The German Sep IFO business climate unexpectedly rose +0.1 to 108.5, better than expectations of -0.4 to 107.9.

Norges Bank Governor Olsen said “growth prospects for the Norwegian economy have weakened, and inflation is projected to abate further out” as the Norges Bank cut the overnight deposit rate by 25 bp to a record low 0.75% and forecast that the overnight rate may fall as low as 0.59% by Q3 of 2016.

The Japan Sep Nikkei manufacturing PMI fell -0.8 to 50.9, a bigger decline than expectations of -0.5 to 51.2.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Fed Chair Janet Yellen’s lecture at the University of Massachusetts Amherst, (2) weekly initial unemployment claims (expected +9,000 to 273,000, previous -11,000 to 264,000) and continuing claims (expected +3,000 to 2.240 million, previous -26,000 to 2.237 million), (3) Aug Chicago Fed national activity index (expected -0.10 to 0.24, Jul 0.34), (4) Aug durable goods orders (expected -2.3% and +0.1% ex transportation, Jul +2.2% and +0.4% ex transportation), (5) Aug new home sales (expected +1.6% to 515,000, Jul +5.4% to 507,000), (6) Sep Kansas City Fed manufacturing index (expected +3 to -6, Aug -9), and (7) the Treasury’s auction of $29 billion of 7-year T-notes.