OVERNIGHT MARKETS AND NEWS
December E-mini S&Ps (ESZ15 -0.27%) are down -0.12% and European stocks are down -0.22% at a 1-week low as deflation concerns in China weighed on global equity markets. Miners and raw material producers are weaker after China Oct producer prices fell by the most in 6 years, which undercut industrial metals prices and sent the price of copper (HGZ15 -0.65%) down -0.78% to a 2-1/2 month low. Asian stocks settled mostly lower: Japan +0.15%, Hong Kong -1.43%, China -0.18%, Taiwan -1.22%, Australia -0.40%, Singapore closed for holiday, South Korea -1.34%, India -1.45%. Japan’s Nikkei Stock index bucked the trend and closed higher as bank stocks rallied after Reuters reported that the government is considering raising the deposit limit on savings accounts by between 3 million yen ($24,347) and 5 million yen this fiscal year. Losses in Chinese stocks were limited on speculation the weaker-than-expected China Oct CPI gives the PBOC more room for monetary easing.
The dollar index (DXY00 +0.13%) is up +0.20%. EUR/USD (^EURUSD) is down -0.18% on the prospects for additional easing measures from the ECB. USD/JPY (^USDJPY) is up +0.03%.
Dec T-note prices (ZNZ15 +0.15%) are up +5.5 ticks.
ECB Board member and Bank of Finland Governor Liikanen said that “decelerating growth in the emerging economies threatens to dampen global activity” and the Governing Council “is willing and able to act by using all the instruments available within its mandate if warranted in order to maintain an appropriate degree of monetary accommodation.”
Reuters reports that four unnamed ECB Governing Council members say a consensus is forming around cutting the deposit rate in December, which currently stands at -0.2%. Three of the policymakers say debate is now about the size of the rate cut with some arguing that a -0.1% reduction is already priced in by markets.
China Oct CPI rose +1.3% y/y, less than expectations of +1.5% y/y and the slowest pace of increase in 5 months.
China Oct PPI fell -5.9% y/y, right on expectations and the fastest pace of decline in 6 years.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Oct import price index (expected -0.1% m/m and -9.4% y/y, Sep -0.1% m/m and -10.7% y/y), (2) Sep wholesale inventories (expected +0.1% m/m, Aug +0.1% m/m) and Sep wholesale trade sales (expected -0.1% m/m, Aug -1.0% m/m), (3) the Treasury’s auction of $24 billion of 10-year T-notes, and (4) Chicago Fed President Charles Evans’ speech on a panel at a conference on government debt management.
