OVERNIGHT MARKETS AND NEWS
June E-mini S&Ps (ESM15 +0.24%) this morning are up +5.50 points (+0.26%) on carry-over optimism from European stocks. The Euro Stoxx 50 index this morning is sharply higher by +1.7% after an ECB official said that the ECB will increase its QE buying in May and June ahead of lower liquidity during the summer. Asian stocks today closed mostly higher with a sharp +3.13% increase in China’s Shanghai Composite: Japan +0.68%, Hong Kong +0.37%, Taiwan +1.15%, Australia -0.77%, Singapore -0.16%, South Korea +0.36%, India -0.15%.
The dollar index (DXY00 +0.81%) is up +0.67% as EUR/USD (^EURUSD) tumbled by -0.0106 (-0.94%) on the ECB’s announcement that it will temporarily boost the size of QE during May and June. USD/JPY (^USDJPY) is slightly higher by +0.07 points (+0.06%). GBP/USD is down -0.87% this morning on the decline in the UK CPI rate to -0.1% y/y, which will keep BOE policy easy. June 10-year T-notes (ZNM15 +0.20%) are up +6.5 ticks on support from higher June bund prices, which are up +0.67 points.
Commodity prices are down -0.64% this morning on the rally in the dollar index. June WTI crude oil (CLN15 -0.81%) is down -0.51 (-0.85%), June Brent crude oil is down -0.63 (-0.95%), and May gasoline (RBN15 -0.50%) is down -0.0172 (-0.85%). May natural gas (NGN15 +1.80%) is up +0.036 (+1.18%).
Precious metals prices are trading lower this morning on the rally in the dollar index with Jun gold (GCM15 -0.64%) down -7.4 (-0.60%) and July silver (SIN15 -1.65%) down -0.317 (-1.79%). July copper (HGN15 -1.51%) is down -0.052 (-1.79%). Grain prices are trading lower while softs are mixed.
The ECB will increase its QE buying in May and June ahead of lower liquidity during the summer months, according to comments in a speech today by ECB Executive Board member Benoit Coeure. He said that “the slightly higher purchase volume that market analysts may observe in coming weeks is therefore unrelated to the recent episode of market volatility.” The QE program involves the purchase of about 60 billion euros per month of securities and is due to last until Sep 2016 and total 1.1 trillion euros. Although Mr. Coeure said that the purchase adjustment is related to liquidity concerns, the outcome is having the ECB’s desired effect today of pushing the euro lower and providing support for Eurozone bond prices.
