OVERNIGHT MARKETS AND NEWS

Mar E-mini S&Ps (ESH18 +0.31%) this morning are up +0.21% on signs of strength in China’s economy that is positive for global growth after a gauge of Chinese manufacturing activity unexpectedly expanded last month. European stocks are down -0.69% at a 3-1/2 month low as strength in EUR/USD undercuts European exporter stocks. EUR/USD climbed to a 3-3/4 month high and the 10-year German bund yield rose to a 2-1/4 month high of 0.462% on hawkish comments from ECB Executive Board member Coeure who said the ECB’s current extension of stimulus may be the last. Asian stocks settled mostly higher: Japan closed for holiday, Hong Kong +1.99%, China +1.24%, Taiwan +0.64%, Australia -0.06%, Singapore +0.80%, South Korea +0.39%, India unchanged. China’s Shanghai Composite rose to a 1-1/4 month high and the Chinese yuan climbed to a 3-3/4 month high against the dollar after the China Dec Caixin manufacturing PMI unexpectedly rose +0.7 to a 4-month high of 51.5, which bolsters confidence in China’s economic outlook.

The dollar index (DXY00 -0.44%) is down -0.38% at a 3-1/4 month low. EUR/USD (^EURUSD) is up +0.42% at a 3-3/4 month high on hawkish comments from ECB Executive Board member Coeure. USD/JPY (^USDJPY) is down -0.40% at a 2-week low.

Mar 10-year T-note prices (ZNH18 -0.15%) are down -6.5 ticks.

ECB Executive Board member Coeure said, “given what we see in the economy, I believe there is a reasonable chance that the extension of our asset purchase program decided in Oct can be the last.”

The China Dec Caixin (flash) manufacturing PMI unexpectedly rose +0.7 to 51.5, stronger than expectations of -0.1 to 50.7 and the fastest pace of expansion in 4 months.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) revised-Dec Markit manufacturing PMI expected unrevised at 55.0 (prelim-Dec +1.1 to 55.0), (2) USDA weekly grain export inspections.