OVERNIGHT MARKETS AND NEWS

Mar E-mini S&Ps (ESH18 -0.45%) this morning are down -0.39% as the markets remain on edge following the extreme volatility over the past two sessions, although prices have recovered from their worst levels due to a rally in European stocks. European stocks are up +0.50% on reduced political risks in Germany after Chancellor Merkel’s Christian Democrat party concluded a coalition agreement with the German Social Democratic Party that ends a 4-month long political stalemate. European equities also received a boost after the European Commission raised its Eurozone 2018 GDP forecast to 2.3% from a Nov estimate of 2.1%. Weakness in energy stocks is limiting the upside in the overall market with Mar WTI crude oil (CLH18 -0.63%) down -0.32% at a 2-week low. Asian stocks settled mixed: Japan +0.16%, Hong Kong -0.89%, China -1.82%, Taiwan +1.42%, Australia +0.75%, Singapore-0.66%, South Korea -2.37%, India -0.33%. Japanese stocks bounced back Wednesday after Tuesday’s sharp decline aided by strength in Toyota Motor who closed up over 1% after it raised its annual profit forecast for the third time this fiscal year. China’s Shanghai Composite fell to a 1-1/4 month low as bank stocks and property developers fell after the China Securities Journal reported that lenders in some cities raised mortgage rates.

The dollar index (DXY00 +0.31%) is up +0.27%. EUR/USD (^EURUSD) is down -0.27%. USD/JPY (^USDJPY) is down -0.32%.

Mar 10-year T-note prices (ZNH18 -0.12%) are down -1.5 ticks.

The European Commission raised its Eurozone 2018 GDP forecast to 2.3% from a 2.1% estimate in Nov and hiked its Eurozone 2018 inflation forecast to 1.5% from 1.4%.

German Dec industrial production fell -0.6% m/m, stronger than expectations of -0.7% m/m.

Speaking at an event in Frankfurt, Dallas Fed President Kaplan said, “it’s healthy that there is some correction in the markets as people know the U.S. and global markets have gone for an extended run without a 3% correction and low volatility.”