Morning Call For February 4, 2016


March E-mini S&Ps (ESH16 +0.01%) are up +0.14% and European stocks are up 0.63% as a selloff in the dollar index to a 3-month low underpins crude oil and metal prices and fuels a rally in energy and commodity producer stocks. Gains in European stocks were limited as automakers retreated, led by a nearly 4% decline in Daimler AG, after the automaker said growth will slow down in 2016 with only "slight' gains in revenue and earnings. As expected, the BOE kept its benchmark rate unchanged at 0.50% and maintained its asset purchase target at 375 billion pounds. Asian stocks settled mostly higher: Japan -0.85%, Hong Kong +1.01%, China +1.53%, Taiwan closed for holiday, Australia +2.12%, Singapore +0.30%, South Korea +1.72%, India +0.48%. Japan's Nikkei index closed lower as export stocks sold off after a rally in the yen to a 2-week high against the dollar reduced the earnings prospects of exporters.

The dollar index (DXY00 -0.60%) is down -0.54% at a 3-month low. EUR/USD (^EURUSD) is up +0.64% at a 3-1/4 month high. USD/JPY (^USDJPY) is down -0.23%.

Mar T-note prices (ZNH16 -0.07%) are down -3 ticks.

The European Commission cut its Eurozone 2016 GDP forecast to 1.7% from a Nov projection of 1.8% and slashed its Eurozone 2016 CPI estimate to 0.5% from a Nov forecast of 1.0%.


Key U.S. news today includes: (1) Boston Fed President Eric Rosengren's speech to the Financial Stability Institute of the Bank for International Settlements in Cape Town on progress addressing “Too Big to Fail,” (2) Jan Challenger job cuts (Dec -27.6% y/y), (3) weekly initial unemployment claims (expected -1,000 to 277,000, previous -16,000 to 278,000) and continuing claims (expected -28,000 to 2.240 million, previous +49,000 to 2.268 million), (4) Q4 non-farm productivity (expected -2.0%, Q3 +2.2%. Q4 unit labor costs expected +4.1%, Q3 +1.8%), (5) Dallas Fed President Robert Kaplan's speech on global economic conditions at an event in Dallas, TX, (6) Dec factory orders (expected -2.8%, Nov -0.2% and -0.3% ex transportation), and (7) Cleveland Fed President Loretta Mester's speech at an MNI event where she will address questions on Fed economic and monetary policy.

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