Morning Call For December 5, 2014

OVERNIGHT MARKETS AND NEWS

December E-mini S&Ps (ESZ14 +0.10%) this morning are up +0.08% ahead of U.S. Nov payrolls data and European stocks are up +1.63% after German Oct factory orders exceeded expectations. Stocks also rose and European government bonds rallied, with Italy's 10-year bond yield falling to a record low 1.948%, on speculation the ECB was preparing a package of asset purchases. According to 2 central bank officials familiar with the deliberations, the ECB Governing Council expects to consider a proposal for broad-based asset purchases including sovereign debt at the next meeting on Jan 22. European stocks gained despite the action by the Bundesbank to cut its German GDP and inflation forecasts for this year and next. Asian stocks closed mixed: Japan +0.19%, Hong Kong +0.71%, China +0.66%, Taiwan -0.20%, Australia -0.62%, Singapore +0.59%, South Korea +0.07%, India -0.37%. Japan's Nikkei Stock Index advanced to a 7-1/3 year high as exporters rallied as the yen weakened past 120 yen per dollar for the first time in 7-1/3 years. China's Shanghai Stock Index climbed to a new 3-1/2 year high and is up +9.5% this week amid speculation the PBOC will cut reserve-requirement ratios for banks after lowering interest rate for the first time in 2 years in an attempt to revive economic growth. Commodity prices are mostly lower. Jan crude oil (CLF15 -0.72%) is down -0.99%. Jan gasoline (RBF15 -0.91%) is down -1.08%. Feb gold (GCG15 -0.60%) is down-0.46%. Mar copper (HGH15 +0.55%) is up +0.65%. Agriculture prices are weaker. The dollar index (DXY00 +0.19%) is up +0.20%. EUR/USD (^EURUSD) is down -0.23%. USD/JPY (^USDJPY) is up +0.73% at a fresh 7-1/3 year high. Mar T-note prices (ZNH15 -0.06%) are down -2.5 ticks.

In its biannual report, the Bundesbank cut its 2014 German GDP forecast to +1.4% from a Jun estimate of +1.9% and lowered its 2015 GDP forecast to +1.0% from +2.0%. The Bundesbank also lowered its German 2014 inflation forecast to +0.9% from a Jun projection of +1.1% and cut its 2015 inflation forecast to +1.1% from +1.5%.

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