Morning Call For Thursday, Sept. 13

Overnight Markets And News

Sep E-mini S&Ps (ESU18 +0.23%) this morning are up +0.21% and European stocks are up +0.39%, both at 1-week highs, on an easing of trade tensions as the U.S. and Chinese governments are working on the logistics for a new round of trade talks. The BOE as expected, voted 9-0 to keep its benchmark interest rate unchanged at 0.75% and to maintain its asset purchase target at 435 billion pounds. The BOE also upgraded its growth forecast as it raised its UK Q3 GDP estimate to +0.5% from 0.4%. The markets are also awaiting the outcome of this morning’s ECB meeting and any clues as to when the ECB may tighten its policies. The Turkish lira rallied to a 2-week high after Turkey’s central bank raised the 1-week repo rate by 625 bp to 24%, more than expectations for +350 bp increase. Losses in energy stocks were limiting gains in the overall market with Oct WTI crude oil (CLV18 -1.34%) down -1.32%. Asian stocks settled mostly higher : Japan +0.96%, Hong Kong +2.54%, China +1.15%, Taiwan +0.04%, Australia -0.76%, Singapore +0.23%, South Korea +0.02%, India closed for holiday. Asian markets rallied, with Japan’s Nikkei Stock Index climbing to a 1-1/2 week high, on renewed hopes that the U.S. and China may enter new trade talks to prevent trade tensions from escalating. Japanese stocks also garnered support on signs of economic strength after Japan Jul core machine orders jumped +11.0% m/m, the biggest increase in 2-1/2 years.

The dollar index (DXY00 +0.07%) is up +0.05%. EUR/USD (^EURUSD +0.03%) is up +0.03%. USD/JPY (^USDJPY +0.27%) is up +0.26.

Dec 10-year T-note prices (ZNZ18 -0-035) are down -3.5 ticks.

Japan Aug PPI was unch m/m and rose +3.0% y/y, weaker than expectations of +0.1% m/m and +3.1% y/y.

Japan Jul core machine orders jumped +11.0% m/m, stronger than expectations of +5.5% m/m and the biggest increase in 2-1/2 years.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly initial unemployment claims (expected +7,000 to 210,000, previous -10,000 to 203,000) and continuing claims (expected +3,000 to 1.710 million, previous -3,000 to 1.707 million), (2) Aug CPI (expected +0.3% m/m and +2.8% y/y, Jul +0.2% m/m and +2.9% y/y) and Aug CPI ex food & energy (expected +0.2% m/m and +2.4% y/y, Jul +0.2% m/m and +2.4% y/y), (3) Treasury auctions $15 billion 30-year T-bonds, (4) Atlanta Fed President Raphael Bostic (voter) discusses the economic outlook and monetary policy to the Mississippi Council of Economic Education, (5) Aug monthly budget statement (expected -$183.0 billion, Jul -$76.9 billion).