Morning Call For May 15, 2015


June E-mini S&Ps (ESM15 +0.12%) this morning are up +0.12% at a new record high and European stocks are up +0.41% as a rally in global bond markets gives stocks a boost. Roche Holding AG is up nearly 3% in pre-market trading after a study showed its experimental immunotherapy for lung cancer doubled the likelihood of survival in some patients, and United Parcel Service climbed 1% in pre-market trading after Goldman Sachs upgraded the stock to 'Buy' from 'Hold.' Asian stocks closed mixed: Japan +0.83%, Hong Kong +1.96%, China -1.59%, Taiwan -0.33%, Australia +0.68%, Singapore +0.21%, South Korea -0.89%, India +0.43%. Japanese stocks settled higher after the yen weakened on expectations the BOJ may further expand stimulus on deflation concerns when Japan Apr producer prices fell -2.1% y/y, the most in 2-3/4 years.

Commodity prices are mostly lower. Jun crude oil (CLM15 -0.43%) is -0.52% and Jun gasoline (RBM15 -0.64%) is down -0.59%. Metals prices are weaker. Jun gold (GCM15 -0.88%) is down -0.91%. Jul copper (HGN15 -0.80%) is down -0.94%. Copper prices retreated despite signs of smaller Chinese supplies after weekly Shanghai copper inventories fell -10,147 MT to a 2-3/4 month low. Agriculture prices are higher.

The dollar index (DXY00 +0.35%) is up +0.37%. EUR/USD (^EURUSD) is down -0.43% after ECB President Draghi said Thursday that the ECB's QE program will be carried out "in full." USD/JPY (^USDJPY) is up +0.55%.

Jun T-note prices (ZNM15 +0.12%) are up +7.5 ticks.

The PBOC has asked the IMF to include the Chinese yuan in its reserve basket of currencies, which now include the dollar, euro, yen and pound. PBOC Governor Zhou Xiaochuan said last month that China is making the yuan more freely usable in order to be included in the IMF's Special Drawing Rights (SDR) basket, which the IMF will review later this year. The dollar has a 41.9% weighting in the SDR basket, the euro 34.4%, the pound 11.3% and the yen 9.4%. According to HSBC Holdings Plc, the yuan's share in the SDR could be 14%, reflecting the importance of China in global exports. An inclusion of the yuan into the SDR basket could fuel a sharp increase in global diversification into yuan assets.

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