Morning Call For June 2, 2016


Jun E-mini S&Ps (ESM16 -0.11%) are down -0.07% and European stocks are up +0.30% ahead of today's ECB interest rate decision. No change in interest rates or additional stimulus is expected, although ECB President Draghi will unveil the ECB's latest economic and price-growth forecasts at a press conference following today's meeting. The markets are also focused on today's OPEC meeting in Vienna and tomorrow's monthly U.S. payrolls data. Asian stocks settled mixed: Japan -2.32%, Hong Kong +0.47%, China +0.40%, Taiwan -0.48%, Australia -0.83%, Singapore +0.16%, South Korea +0.25%, India +0.48%. Japan's Nikkei Stock Index dropped to a 1-week low as exporter stocks declined and led the overall market lower after USD/JPY tumbled to a 2-week low, which reduces the prospects for exporters' earnings.

The dollar index (DXY00 -0.16%) is down -0.16%. EUR/USD (^EURUSD) is up +0.10% at a 1-week high on expectations that the ECB will refrain from additional stimulus at today's policy meeting. USD/JPY (^USDJPY) is down -0.54% at a 2-week low after Japanese Prime Minister Abe said that a sales-tax increase will be postponed until 2019 from April 2017.

Sep T-note prices (ZNU16 +0.12%) are up +3 ticks.

In today's OPEC meeting in Vienna, Saudi Arabia proposed that OPEC restore a production target scrapped at the cartel's last meeting in December, although Iran opposes a production target as it wants to boost its oil production to pre-sanction levels. The odds of any cut in OPEC production are small after Iranian Oil Minister Bijan Namdar Zanganeh said "a general quota for OPEC with no country quota has no meaning."


Key U.S. news today includes: (1) weekly MBA mortgage applications (previous +2.3% with purchase sub-index +4.8% and refi sub-index +0.4%), (2) revised-May Markit U.S. manufacturing PMI (expected unrevised at 50.5, preliminary-May -0.3 to 50.5), (3) May ISM manufacturing index (expected -0.5to 50.3, Apr -1.0 to 50.8), (4) Apr construction spending (expected +0.6%, Mar +0.3%), (5) Fed Beige Book, (6) May total vehicle sales (expected 17.30 million, Apr 17.32 million).

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