Morning Call For Friday, Sept. 14


Overnight Markets And News

Dec E-mini S&Ps (ESZ18 +0.19%) this morning are up +0.15% at a 2-week high on expectations that data later this morning will show strong U.S. Aug retail sales and Aug manufacturing activity. Also, stocks moved higher as trade tensions on the prospects for new trade talks between the U.S. and China. European stocks are up +0.20% as strength in automakers leads the overall market higher. The German 10-year bund yield climbed to a 6-week high of 0.443% after Eurozone Q2 labor costs rose +2.2% y/y, the most in 5-1/2 years, which may prompt the ECB to tighten monetary policy sooner than expected. The Russian ruble climbed to a 1-1/2 week high against the dollar after the Russian central bank unexpectedly hiked its key benchmark rate for the first time since 2014 by 25 bp to 7.50% from 7.25%. Asian stocks settled mostly higher: Japan +1.20%, Hong Kong +1.01%, China -0.18%, Taiwan +1.31%, Australia +0.60%, Singapore +0.95%, South Korea +1.67%, India +0.99%. A rally in USD/JPY to a 6-week high Thursday fueled gains in Japanese exporter stocks that pushed the Nikkei Stock Index up to a 7-1/4 month high.

The dollar index (DXY00 -0.01%) is down -0.05% at a 6-week low on negative carry-over from Thursday’s data that showed an unexpected slowdown in U.S. Aug core consumer prices. EUR/USD (^EURUSD +0.09%) is up +0.10% at a 2-week high after Eurozone Q2 labor costs rose at the fastest pace in 5-1/2 years, which is hawkish for ECB policy. USD/JPY (^USDJPY -0.04%) is down -0.08%. 
Dec 10-year T-note prices (ZNZ18 -0-060) are down -6 ticks at a 5-week low.

Eurozone Q2 labor costs rose +2.2% y/y, the fastest pace of increase in 5-1/2 years.

China Aug industrial production rose +6.1% y/y, right on expectations.

China Aug retail sales rose +9.0% y/y, stronger than expectations of +8.8% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) Aug retail sales (expected +0.4% and +0.5% ex autos, Jul +0.5% and +0.6% ex autos), (2) Aug import price index (expected -0.2% m/m and +4.1% y/y, Jul unch m/m and +4.8% y/y), (3) Chicago Fed President Charles Evans (non-voter) speaks at the Northeast Indiana Regional Economic Forum in Fort Wayne, IN, on current economic conditions and monetary policy, (4) Aug industrial production (expected +0.3%, Jul +0.1%), (5) Jul business inventories (expected +0.5%, Jun +0.1%), (6) Prelim-Sep University of Michigan U.S. consumer sentiment index (expected +0.4 at 96.6, Aug -1.5 to 96.2), (7) Boston Fed President Eric Rosengren (non-voter) speaks at the Brookings Conference on “Should the Fed Regularly Evaluate its Monetary Policy Framework?”

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