- European stocks this morning are trading with solid gains with the European Stoxx 50 up 1.04%. Sep S&Ps are up 6.20 points (+0.56%). European stocks have been boosted by the continued decline in bank risk and a sharp 9% rally in UBS due to a favorable earnings report. The Markit iTraxx Financial Index of credit default swaps for 25 banks and insurers fell for the 6th day by 6.5 bp to hit a 3-month low of 111 bp. Deutsche Bank rallied by 3.5% after also reporting stronger than expected earnings today. The European stock markets were also encouraged by the fact that Hungary was able to sell $228 million in 3-month T-bills despite the recent financial turmoil in Hungary and the forint rallied by 0.8%. In another favorable US earnings report, Du Pont reported Q2 EPS of $1.17 that was well above the analyst consensus of 94 cents and raised its full-year 2010 EPS guidance to $2.90-$3.05 from $2.50-$2.70.
- The Asian markets today closed mixed: Japan -0.07%, Hong Kong +0.64%, China -0.55%, Taiwan -0.51%, Australia +0.25%, Singapore +0.42%, South Korea +0.03%, Bombay +0.32%. India's central bank today raised its reverse repo rate by 50 bp to 4.50% and its repo rate by 25 bp to 5.75% in order to address inflation concerns. The central bank raised its India GDP forecast to 8.5% from 8.0% and its wholesale price inflation forecast to 6.0% from 5.5% for the year through March.
- Sep S&Ps this morning are trading +6.20 points on favorable earnings from Du Pont and carry-over support from today's 1.0% rally in the European stock markets. The stock market yesterday rallied fairly sharply (Dow +0.97%, S&P 500 +1.12%, Nasdaq Composite +1.19%). Bullish factors yesterday included (1) the June new home sales report of +23.6% to 330,000, which was much stronger than the market consensus for a 3.3% gain to 310,000, which helped boost the S&P US homebuilder sub-index by 2.9% and put consumer sentiment in a better light, (2) the sharp 5.6% rally in FedEx after the company raised its 2010 earnings guidance due to increased global shipping demand, (3) continued optimism about earnings after 83% of S&P 500 companies have beaten earnings estimates, (4) positive M&A news with Genzyme up 7.8% as a takeover target, (5) a 4.9% rally in BP after reports the company will name Robert Dudley to succe3ss Tony Hayward as CEO, and (6) a 1.6% rally in AT&T after an upgrade by Deusche Bank to Buy from Hold.
- September 10-year T-notes this morning are trading -9.5 ticks on stronger US and European stocks and on supply overhang ahead of today's sale of 2-year T-notes. Sep 10-year T-note prices yesterday closed slightly higher by 2 ticks on some short-covering after the 2-session sell-off. The T-note market was able to overcome a number of bearish factors including the much stronger-than-expected new home sales reports, this week's heavy $104 billion auction calendar, the fairly sharp rally in stocks, and reduced safe-haven demand after last Friday's EUropean bank stress tests were favorable.
- The dollar index this morning is trading -0.09 points with the dollar/yen up 0.55 yen and the euro/dollar up 0.27 cents. The euro was boosted today by strength in European banking stocks and the continued decline in European bank risk. The dollar index yesterday continued lower and edged to new 2-1/2 month low. The euro rallied on relief about last Friday's European bank stress test and the dollar fell on a continued decline in safe-haven demand. The dollar would normally have rallied on strong economic data such as yesterday's strong new home sales report. However, in the current market environment where the dollar is very dependent on safe-haven demand, the strong housing data helped spark a rally in stocks and the dollar therefore fell on reduced safe-haven support.
- September crude oil prices this morning are up 31 cents and September gasoline is up 0.64 cents per gallon on US and European stock market strength and on expectations for Wednesday's DOE report to show a drop in crude oil inventories to a 4-month low due to disruptions from Tropical Storm Bonnie. In addition, Goldman Sachs released a report saying that crude oil prices are "significantly" below the level warranted by fundamentals and that the supply/demand balance will tighten in the second half of 2010. Sep crude oil prices yesterday closed unchanged, consolidating below last week's 3-week high. Gasoline prices retreated from last Friday's 3-week high and closed 1.28 cents lower. Bearish factors included (1) long liquidation pressure, and (2) the fact that Tropical Storm Bonnie hit Louisiana on Sunday with only 30 mph winds and caused no real damage in the Gulf of Mexico. The main bullish factor was the new home sales report and the fairly sharp rally in the stock market, which sparked some optimism about the economy and fuel demand. The market consensus for Wednesday's weekly DOE report is for crude oil inventories to fall 1.75 mln bbl, gasoline inventories to rise 300,000, and distillates to rise 2 mln bbl. The weekly inventory data will be distorted by Tropical Storm Bonnie, which temporarily idled about 52% of U.S. Gulf oil output.
Earnings reports (confirmed releases, sorted by mkt cap) OXY-Occidental Petroleum (BEST earnings consensus $1.35), DD-Du Pont ($0.94), LMT-Lockheed Martin (1.78), AFL-Alfac (1.33), NSC-Norfolk Southern (0.99), TMO-Thermo Fisher, BRCM-Broadcom (0.62), ACE-Ace LTD (1.84), PCAR-Paccar (0.21), CMI-Cummins (0.89), AET-Aetna (0.73), ECL-Ecolab (0.56), BXP-Boston Properties (0.30), WU-Western Union (0.32), CHRW-CH Robinson (0.55), ALO-Valero Energy (0.70), LLL-L-3 Comm (1.93), IVZ-Invesco (0.26), ABC-Amerisourceberge (0.49), RF-Regions Financial, CIT-CIT Group (0.34), FISV-Fiserv (0.96).
Global Financial Calendar
| Tuesday 7/27/10 | |
|---|---|
| United States | |
| 0745 ET | ICSC (Int'l Council of Shopping Centers) weekly retailer sales, previous +1.4% w/w and +4.2% weekly y/y. |
| 0855 ET | Redbook weekly retailer sales, previous -0.6% month-to-date m/m and +2.9% month-to-date y/y. |
| 0900 ET | May S&P/CaseShiller Composite-20 home price index expected unchanged m/m and +3.8% y/y, Apr +0.4% m/m and +3.8% y/y. |
| 1000 ET | Jul Richmond Fed manufacturing index expected -8 to 15, Jun -3 to 23. |
| 1000 ET | Jul U.S. consumer confidence expected -1.9 to 51.0, Jun -9.8 to 52.9. |
| 1130 ET | Weekly 4-week and monthly 1-year T-bill auctions. |
| 1300 ET | Treasury auctions $38 billion 2-year T-notes. |
| 1700 ET | ABC U.S. weekly consumer confidence, previous -1 to -45. |
| Germany | |
| 0200 ET | Aug German GfK consumer confidence survey expected unchanged at 3.5, Jul unchanged at 3.5. |
| 0200 ET | Jun German import price index expected +0.5% m/m and +8.6% y/y. |
| Euro-Zone | |
| 0400 ET | Jun Euro-Zone M3 money supply expected -0.2% 3-mo avg and -0.1% y/y, May -0.2% 3-mo avg and -0.2% y/y. |
| France | |
| 1200 ET | Jun French total jobseekers expected 2,690,500, May 2,699,600. Jun jobseekers net change expected 500, May 22,600. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures | ||||
|---|---|---|---|---|
| S&P (Globex) (U0) | 1115.70 | 6.20 | 0.56% | 07:11:08 |
| DJIA (CBOT) (U0) | 10510 | 53 | 0.51% | 07:07:51 |
| European Stocks | ||||
| Europe DJ Stoxx 50 | 2509.64 | 25.84 | 1.04% | 07:06:00 |
| London UK FTSE Index | 5396.20 | 45.08 | 0.84% | 07:06:13 |
| German Dax Index | 6237.79 | 43.58 | 0.70% | 07:06:12 |
| French CAC 40 Index | 3677.09 | 40.91 | 1.13% | 07:06:00 |
| Asian-Pacific Stocks | ||||
| Japan Nikkei Index | 9497 | -7 | -0.07% | 02:29:01 |
| Hong Kong Hang Seng | 20973 | 133 | 0.64% | 04:01:30 |
| China CSI 300 Index | 2796 | -15 | -0.55% | 03:01:22 |
| Taiwan TAIEX Index | 7748 | -39 | -0.51% | 01:46:01 |
| Australian S&P 200 | 4497.4 | 11.3 | 0.25% | 02:39:09 |
| Singapore Str. Times | 2979.38 | 12.39 | 0.42% | 05:10:01 |
| South Korea KOSPI 200 | 230.93 | 0.06 | 0.03% | 05:03:27 |
| Bombay Sensex 30 | 18078 | 57.56 | 0.32% | 06:30:02 |
| Karachi KSE-100 | 10387 | 92 | 0.89% | 06:39:51 |
| US Interest Rates | ||||
| 10yr T-notes (CBT)(U0) | 122.140 | -0.095 | -0.24% | 07:11:12 |
| Cash 10yr T-note Price | 104.005 | -0.085 | -0.25% | 07:16:30 |
| Cash 10yr T-note Yield | 3.023 | 0.031 | 1.02% | 07:16 |
| 5yr T-note (CBT)(U0) | 118.270 | -0.055 | -0.14% | 07:11:08 |
| Cash 5yr T-note Price | 100.170 | -0.055 | -0.17% | 07:16:00 |
| Cash 5yr T-note Yield | 1.762 | 0.036 | 2.11% | 07:15 |
| 30-yr T-bond (CBT)(U0) | 126.23 | -0.16 | -0.39% | 07:11:09 |
| Cash 30yr T-bond Price | 105.170 | -0.200 | -0.59% | 07:19:31 |
| Cash 30yr T-bond Yield | 4.053 | 0.035 | 0.87% | 07:19 |
| Eurodollars (CME)(U0) | 99.545 | 0.015 | 0.02% | 07:09:10 |
| Eurodollars (CME)(Z0) | 99.490 | 0.010 | 0.01% | 07:06:33 |
| Asian & European Rates | ||||
| 10-yr JGBs (TSE) (U0) | 141.86 | 0.12 | 0.08% | 02:00:00 |
| EuroyenTibor(SGX)(U0) | 99.655 | 0.000 | 0.00% | 7/26/2010 |
| Bunds (Eurex) (U0) | 127.72 | -0.01 | -0.01% | 07:06:11 |
| Euribor (Eurex) (U0) | 99.00 | -0.02 | -0.02% | 03:14:54 |
| UK Gilts (Liffe) (U0) | 120.11 | -0.13 | -0.11% | 07:06:11 |
| Short Stlg (Liffe) U0) | 99.23 | 0.01 | 0.01% | 07:05:41 |
| Forex | ||||
| U.S. Dollar Index | 81.94 | -0.09 | -0.11% | 07:11:11 |
| US Dollar-Japanese Yen | 87.43 | 0.55 | 0.63% | 07:21:11 |
| EuroFX-US Dollar | 1.3022 | 0.0027 | 0.27% | 07:21:12 |
| US Dollar-Swiss Franc | 1.0579 | 0.0093 | 0.93% | 07:21:12 |
| British Pound-US$ | 1.5537 | 0.0047 | 0.47% | 07:21:12 |
| US$-Canadian Dlr | 1.0290 | -0.0033 | -0.33% | 07:21:12 |
| Yen (Globex) (U0) | 1.1446 | -0.0071 | -0.71% | 07:11:12 |
| Euro FX (Globex) (U0) | 1.3023 | 0.0035 | 0.27% | 07:11:11 |
| SwissFranc (Globex)(U0) | 0.9464 | -0.0072 | -0.76% | 07:11:11 |
| British Pound(Glbx)(U0) | 1.5539 | 0.0066 | 0.43% | 07:11:11 |
| Canadian$ (Globex)(U0) | 0.9712 | 0.0049 | 0.51% | 07:11:11 |
| Commodities | ||||
| Gold (Comex) (Q0) | 1183.9 | 0.8 | 0.07% | 07:11:11 |
| Silver (Comex) (U0) | 18.195 | -0.005 | -0.03% | 07:10:58 |
| Copper (Comex) (U0) | 323.4 | 1.1 | 0.33% | 07:11:09 |
| Crude Oil (Nymex) (U0) | 79.29 | 0.31 | 0.39% | 07:11:11 |
| Gasoline (Nymex) (U0) | 211.28 | 0.64 | 0.30% | 07:10:39 |
| Heating Oil(Nymex) (U0) | 207.99 | 0.88 | 0.42% | 07:10:22 |
| NaturalGas(Nymex)(U0) | 4.625 | 0.042 | 0.92% | 07:10:55 |
| Corn (CBOT) (Z0) | 380.25 | 2.25 | 0.60% | 07:08:55 |
| Soybeans (CBOT) (X0) | 968.00 | 2.00 | 0.21% | 07:10:45 |
| Wheat (CBOT) (Z0) | 618.50 | -2.50 | -0.40% | 07:08:43 |
