Morning Call For December 9, 2014

OVERNIGHT MARKETS AND NEWS

December E-mini S&Ps (ESZ14 -0.46%) this morning are down -0.32 % at a 1-week low and European stocks are down -1.29% on carry-over from a fall in Chinese stocks that plunged over 4% after the government tightened collateral rules for short-term loans. China said it won't allow bonds rated below AAA or sold by issuers graded lower than AA to be used as collateral for short-term loans obtained through repurchase agreements, which sparked a selloff in riskier debt that spread to government notes and stocks. Asian stocks closed mostly lower: Japan -0.68%, Hong Kong -2.34%, China -4.49%, Taiwan -0.64%, Australia -1.68%, Singapore +0.67%, South Korea -0.20%, India -1.15%. China's Shanghai Stock Index retreated from a 3-1/2 year high and sold-off sharply, led by losses in banking and financial stocks, after the government tightened collateral rules for short-term loans as it takes steps to push local governments away from using opaque financing vehicles to raise funds. Commodity prices are mixed. Jan crude oil (CLF15 +1.02%) is up +1.17%. Jan gasoline (RBF15 +0.55%) is up +0.60%. Feb gold (GCG15 +1.40%) is up +0.89%. Mar copper (HGH15 -0.54%) is down -0.59%. Agriculture prices are lower. The dollar index (DXY00 -0.33%) is down 0.17%. EUR/USD (^EURUSD) is up +0.32%. USD/JPY (^USDJPY) is down-0.60%. The British pound held near a 15-month low against the dollar after UK Oct manufacturing activity unexpectedly fell for the first time in 5 months. Mar T-note prices (ZNH15 +0.21%) are up +2.5 ticks.

The German Oct trade balance shrank to a surplus of +21.9 billion euros from an upward revised +22.1 billion euro surplus in Sep, larger than expectations of +18.9 billion euros. Oct exports fell -0.5% m/m, a smaller decline than expectations of -1.7% m/m. Oct imports fell -3.1% m/m, more than expectations of -1.7% m/m and the biggest decline in 23 months.

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