Morning Call For Monday, Dec. 3

Overnight Markets And News

Dec E-mini S&Ps (ESZ18 +1.45%) this morning are up +1.50% and European stocks are up +1.64%, both at 3-week highs, as global stocks soar after the U.S. and China agree to a temporary truce in their trade war. Automakers and mining stocks rallied after President Trump tweeted that China agreed to "reduce and remove" tariffs on imported American-made cars. Dec COMEX copper (HGZ18 +1.80%) jumped +1.78% to a 1-3/4 month high on improved demand prospects for industrial metals. Also, energy stocks gained after Jan WTI crude oil (CLF19 +3.97%) surged +4.22% to a 1-week high when Saudi Arabia and Russia agreed to extend their pact to manage crude output into 2019 and after Alberta, Canada's largest crude producing region, announced a cut in production of crude and bitumen by 325,000 bpd from January until excess oil in storage is drawn down. Asian stocks settled higher: Japan +1.00%, Hong Kong +2.55%, China +2.57%, Taiwan +2.53%, Australia +1.84%, Singapore +2.34%, South Korea +1.78%, India +0.13%. Asian equity markets rallied sharply with China's Shanghai Composite at a 1-1/2 week high and Japan's Nikkei Stock Index at a 1-1/2 month high after the U.S. said it will postpone a planned tariff hike on Chinese goods for three months in return for greater purchases of American goods.

The dollar index (DXY00 -0.23%) is down -0.20% . EUR/USD (^EURUSD +0.16%) is up +0.15%. USD/JPY (^USDJPY+0.13%) is unchanged.

Mar 10-year T-note prices (ZNH19 -0-060) are down -6.5 ticks.

Fed Vice Chair Clarida said the U.S. economy is in good shape and the outlook very solid and that the Fed could operate somewhat above 2% inflation.

The UK Nov Markit manufacturing PMI rose +2.0 to 53.1, stronger than expectations of +0.6 to 51.7.

The Eurozone Nov Markit manufacturing PMI was revised upward to 51.8 from the previously reported 51.5, still the slowest pace of expansion in 2 years.

Japan Q3 capital spending rose +4.5% y/y, weaker than expectations of +8.5% y/y. Q3 capital spending ex software rose +2.5% y/y, weaker than expectations of +10.7% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) revised Nov Markit manufacturing PMI (expected unch at 55.4, prelim-Nov -0.3 to 55.4), (2) Oct construction spending (expected +0.4%, Sep unch), (3) Nov ISM manufacturing index (expected -0.2 to 57.5, Oct -2.1 to 57.7), (4) Dallas Fed President Robert Kaplan (non-voter) speak a at a community forum in Laredo, TX, (5) Nov total vehicle sales (expected 17.20 million, Oct 17.50 million).

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