Overnight Markets And News

Dec E-mini S&Ps (ESZ18 -0.39%) this morning are down -0.38% and the 10-year T-note yield climbed to a 1-week high of 3.21% on signs the Fed will continue to raise interest rates into next year. Wednesday’s minutes of the Sep 25-26 FOMC meeting showed Fed officials appeared to favor an eventual move in the fed funds rate above the level they see as neutral for the economy. Weakness in energy stocks is also weighing on the overall market as Nov WTI crude oil (CLX18 -0.95%) fell -1.06% to a 1-month low after the EIA reported weekly U.S. crude stockpiles rose more than expected. European stocks are up +0.02% as strength in quarterly earnings of drug makers leads the overall market higher with Roche Holding AG up 2% after it reported stronger-than-expected Q3 sales and Novartis AG is up over 2% after it raised its 2018 sales guidance. Asian stocks settled mostly lower: Japan -0.80%, Hong Kong -0.03%, China -2.94%, Taiwan -0.25%, Australia +0.06%, Singapore -0.05%, South Korea -0.92%, India -1.09%. China’s Shanghai Composite tumbled to a fresh 3-3/4 year low on fears of forced selling due to widespread margin calls. The yuan dropped to a nearly 2-year low against the dollar after the U.S. Treasury stopped short of declaring China a currency manipulator, which bolstered speculation the PBOC will now let the yuan drift even lower. Japanese stocks retreated on weaker-than-expected trade data that showed Japan exports last month unexpectedly fell by the most in nearly 2 years.

The dollar index (DXY00 -0.06%) is down -0.06%. EUR/USD (^EURUSD +0.16%) is up +0.14%. USD/JPY (^USDJPY -0.16%) is down -0.12%.

Dec 10-year T-note prices (ZNZ18 -0-060) are down -7.5 ticks at a 1-week low.

ECB Governing Council member Rehn said, “if the economy develops roughly in line with the current outlook, the first ECB rate increases will take place in Q4 of 2019.”

UK Sep retail sales ex auto fuel fell -0.8% m/m, weaker than expectations of -0.4% m/m and the biggest decline in 9 months. Sep retail sales including auto fuel also fell -0.8% m/m, weaker than expectations of -0.4% m/m.

The Japan Sep trade balance was in surplus by +139.6 billion yen, better than expectations of a -45.1 billion yen deficit. Sep exports unexpectedly fell -1.2% y/y, weaker than expectations of +2.1% y/y and the biggest decline in nearly 2 years. Sep imports rose +7.0% y/y, weaker than expectations of +13.7% y/y.