Overnight Markets And News

Dec E-mini S&Ps (ESZ18 +0.32%) this morning are up +0.23% and European stocks are up +0.43% on a rally in Italian assets. Italian stocks and government bonds rose on signs the government may reign in budget deficits after the Corriere della Sera newspaper reported that the Italian government will seek to contain the budget deficit at 2% of GDP in 2021, down from 2.4%. The target will be trimmed to 2.2% for 2020, while the target for 2019 will remain at 2.4%. The Five Star Movement-League coalition still needs to release its economic-growth projections before presenting a draft budget proposal to the EU Commission by Oct 15. Gains in European markets were limited after economic data showed an unexpected decline in Eurozone Aug retail sales and a downward revision to the Eurozone Sep Markit composite PMI. Asian stocks settled mostly lower: Japan -0.66%, Hong Kong -0.13%, China and South Korea closed for holidays, Taiwan -0.51%, Australia +0.32%, Singapore +0.76%, India -1.51%.

The dollar index (DXY00 +0.04%) is down -0.02%. EUR/USD (^EURUSD -0.01%) is up +0.03% on a report that Italy’s government will pledge to cut the nation’s budget deficit after next year. USD/JPY (^USDJPY +0.16%) is up +0.17%.

Dec 10-year T-note prices (ZNZ18 -0-040) are down -3.5 ticks.

Chicago Fed President Evans said the U.S. economic fundamentals are strong and he is “quite comfortable” with a December rate hike by the Fed.

Eurozone Aug retail sales unexpectedly fell -0.2% m/m, weaker than expectations of +0.2% m/m.

The Eurozone Sep Markit composite PMI was revised downward by -0.1 to 54.1 from the originally reported 54.2.

The UK Sep Markit/CIPS services PMI fell -0.4 to 53.9, weaker than expectations of -0.3 to 54.0.

U.S. Stock Preview

Key U.S. news today includes: (1) Chicago Fed President Charles Evans (non-voter) speaks on the U.S. economy and monetary policy at an event in London, (2) weekly MBA mortgage applications (previous +2.9% to 352.5 with purchase sub-index +2.6% to 240.4 and refi sub-index +3,2% to 946.8), (3) Richmond Fed President Thomas Barkin (voter) speaks at “The Outlook for Tomorrow: Five Numbers to Watch” at a West Virginia Economic Outlook Conference at Marshall University in Charleston, WV, (4) Sep ADP employment (expected +184,000, Aug +163,000), (5) final-Sep Markit U.S. services PMI (expected +0.1 to 53.0, prelim-Sep 52.9), (6) Sep ISM non-manufacturing index (expected -0.5 to 58.0, Aug +2.8 to 58.5), (7) EIA weekly Petroleum Status Report, (8) Fed Governor Lael Brainard speaks about the payment system at an event in Chicago, (9) Cleveland Fed President Loretta Mester (voter) is keynote speaker at a community banking conference hosted by the St. Louis Fed, (10) Fed Chair Jerome Powell speaks in a moderated discussion at an event in Washington D.C.