Morning Call For Thursday, Dec. 6

Overnight Markets And News

Dec E-mini S&Ps (ESZ18 -1.42%) this morning are down sharply by -1.66% at a 1-week low and European stocks plunged -2.35% to a 2-year low. Concern about global trade fueled a slide in world equity markets after Huawei Technologies Company's CFO was arrested in Canada over potential violations of U.S. sanctions on Iran. Technology stocks sank after the arrest of Wanzhou Meng, who is CFO and daughter of Huawei's founder and also faces extradition to the U.S. Her arrest prompted a strong protest from the Chinese embassy in Canada and threatens the recent trade truce between China and the U.S. A slide in energy stocks is also pushing the overall market lower with Jan WTI crude oil (CLF19 -2.67%) down sharply by -2.38% after Saudi Oil Minister Khalid Al-Falih told reported in Vienna, where OPEC members are meeting, that there is currently no agreement among producers to cut output. The slide in global stock markets has boosted safe-haven demand for government debt and driven down yields to multi-month lows as the 10-year German bund yield tumbled to a 6-month low of 0.242% and the U.S. 10-year T-note yield dropped to a 3-month low of 2.872%. Asian stocks settled lower: Japan -1.91%, Hong Kong -2.47%, China -1.68%, Taiwan -2.34%, Australia -0.19%, Singapore -1.28%, South Korea -1.59%, India -1.59% . Asian markets slumped, with Japan's Nikkei Stock Index falling to a 2-week low, as the arrest of a Chinese technology executive in Canada threatens to ratchet up trade tensions between the U.S. and China.

The dollar index (DXY00 -0.04%) is down -0.01%. EUR/USD (^EURUSD -0.02%) is down -0.03%. USD/JPY (^USDJPY-0.34%) is down -0.32% at a 2-week low as the slump in stocks boosts the safe-haven demand for the yen.

Mar 10-year T-note prices (ZNH19 +0-075) are up +7.5 ticks at a 3-month high.

German Oct factory orders unexpectedly rose by +0.3% m/m, stronger than expectations of -0.4% m/m.

The German Nov Markit construction PMI rose 1.5 to 51.3, the first increase in three months.

U.S. Stock Preview

Key U.S. news today includes: (1) Nov Challenger job cuts (Oct +153.6% y/y), (2) Nov ADP employment change (expected +195,000, Oct +227,000), (3) weekly initial unemployment claims (expected -9,000 to 225,000, previous +10,000 to 234,000) and continuing claims (expected -15,000 to 1.695 million, previous +50,000 to 1.710 million), (4) Oct trade balance (expected -$55.0 billion, Sep -$54.0 billion), (5) revised Q3 non-farm productivity (expected +2.3%, previous +2.2%), (6) final-Nov Markit US services PMI (expected unrevised at 54.4, prelim Nov 54.4), (7) Nov ISM non-manufacturing (expected -1.3 to 59.0, Oct -1.3 to 60.3), (8) Oct factory orders (expected -2.0%, Sep +0.7 and +0.4% ex transportation), (9) EIA weekly Petroleum Status Report, (10) Atlanta Fed President Raphael Bostic (voter) discusses the national outlook at an economic conference in Atlanta, (11) New York Fed President John Williams (voter) holds a discussion with Mervyn King in New York, (12) Fed Chair Jerome Powell gives brief welcoming remarks at a housing conference in Washington, D.C.

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