Morning Call For Tuesday, Dec. 18

U.S. IPO's scheduled to price today: none.

Equity conferences during the remainder of this week: none.

Market Comments

Mar S&P 500 E-minis (ESH19 +0.39%) this morning are up +10.00 points (+0.39%). Monday's closes: S&P 500 -2.08%, Dow Jones -2.11%, Nasdaq 100 -2.22%. The S&P 500 on Monday sold off to a 14-1/2 month low and closed sharply lower. Stocks were undercut by fears that the FOMC at its Tue/Wed meeting might not only raise interest rates but might also signal that its rate-hike regime will continue unabated. There was also weakness in insurance and health care stocks after a court ruling late last Friday jeopardized Obamacare by declaring key elements of the program unconstitutional. Stocks were also undercut by weak U.S. economic data with the -12.4 point decline in the U.S. Dec Empire manufacturing index to a 1-1/2 year low of 10.9 (weaker than expectations of -3.3 to 20.0). There was also weakness in homebuilders after the U.S. Dec NAHB housing market index unexpectedly fell -4 to a 3-1/2 year low of 56, weaker than expectations of unchanged.

Mar 10-year T-notes (ZNH19 +0-045) this morning are up +6 ticks at a 1-week high. Monday's closes: TYH9 +8.5, FVH9 +5.00. Mar 10-year T-notes on Monday closed higher on the weaker-than-expected Dec Empire manufacturing index and Dec NAHB housing market index. T-notes were also supported by increased safe-haven demand with the slump in the S&P 500 to a 14-1/2 month low and by the decline in the 10-year T-note breakeven inflation expectations rate to a 1-1/4 year low.

The dollar index (DXY00 -0.31%) this morning is down -0.344 (-0.35%) at a 1-week low, EUR/USD (^EURUSD +0.35%) is up +0.0040 (+0.35%) at a 1-week high, and USD/JPY (^USDJPY -0.42%) is down -0.49 (-0.43% at a 1-week low. Monday's closes: Dollar Index -0.311 (-0.32%), EUR/USD +0.0042 (+0.37%), USD/JPY -0.56 (-0.49%). The dollar index on Monday closed lower on the sell-off in the S&P 500 to a 14-1/2 month low, which boosted safe-haven demand for the yen and knocked USD/JPY to a 1-week low. The dollar was also undercut by the weaker-than-expected U.S. economic data on Dec Empire manufacturing and the Dec NAHB housing market index, which was dovish for Fed policy.

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