OVERNIGHT MARKETS AND NEWS
Mar E-mini S&Ps (ESH18 +0.34%) are up +0.37% on optimism a House Republican stopgap spending plan can be passed to keep the government open through Feb 16. House Speaker Ryan is attempting to garner enough support for the spending bill that may come up for a vote in the House on Thursday. Upbeat comments from Dallas Fed President Kaplan also fueled gains in stocks when he said, “the economy is going to be strong this year” and he expects the unemployment rate to fall into the 3% range by year end and for inflation to firm up. European stocks are little changed, down by -0.07%, after a rally in EUR/USD (^EURUSD) to a new 3-year high in overnight trade undercut European exporter stocks. Asian stocks settled mixed: Japan -0.35%, Hong Kong +0.25%, China +0.24%, Taiwan +0.17%, Australia -0.54%, Singapore -0.23%, South Korea -0.25%, India +0.89%. China’s Shanghai Composite climbed to a 2-year high as it found support on a rally in Hong Kong stocks to a record high. Japanese stocks gave up early gains and closed lower after USD/JPY fell to a 4-month low in overnight trade, which undercut exporter stocks.
The dollar index (DXY00 +0.42%) is up +0.42% as it recovers from a 3-year low in overnight trade. EUR/USD (^EURUSD) fell back from a new 3-year high in overnight trade and is down -0.42% after ECB Vice President Constancio said “I am concerned about sudden movements in euro appreciation which don’t reflect changes in fundamentals.” USD/JPY (^USDJPY) is up +0.30%.
Mar 10-year T-note prices (ZNH18 -0.18%) are down -6 ticks.
Dallas Fed President Kaplan in an interview with the WSJ said, “the economy is going to be strong this year” and he expects the unemployment rate to fall into the 3% range by year end and for inflation to firm up. He added that he feels “strongly and has a lot of conviction that the base case should be three rate hikes this year, and if he’s wrong could even potentially be more than that.”
Eurozone Nov construction output rose +0.5% m/m, the largest monthly increase in 9 months.
Eurozone Dec new car registrations fell -4.9% y/y to 1.088 million, the biggest decline in 8 months. For the year-to-date, new car registrations rose +3.4% y/y to 15,137,732.
Japan Nov core machine orders unexpectedly rose +5.7% m/m, stronger than expectations of -1.4% m/m.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) weekly MBA mortgage applications (previous +8.3% with purchase sub-index +5.0% and refi sub-index +11.4%), (2) Dec industrial production (expected +0.4%, Nov +0.2%), (3) Jan NAHB housing market index (expected -2 to 72, Dec +5 to 74), (4) Fed Beige Book, (5) Chicago Fed President Charles Evans (non-voter) takes part in a moderated discussion on current economic conditions and monetary policy as the American Council of Life Insurers Executive Roundtable, (6) Cleveland Fed President Loretta Mester (voter) discusses monetary policy communication at Rutgers University.
