Morning Call For Tuesday, May 15

Overnight Markets and News

Jun E-mini S&Ps this morning (ESM18 -0.27%) are down -0.15% and European stocks are down -0.15% on growth concerns amid higher interest rates. German Q1 GDP grew at a slower than expected pace and Eurozone Mar industrial production rose less than expected, while weakness in government debt markets continued for a second day. The 10-year German bund yield rose to a 2-week high of 0.631% on negative carry-over from Monday's hawkish comments from ECB Board member Villeroy de Galhau who said he expects an increase in interest rates next year after bond purchases end this year. Losses were contained on strength in energy stocks with Jun WTI crude oil (CLM18 +0.83%) up +0.92%, just below the recent 3-1/2 year high. The markets will watch for comments on trade talks today between U.S. Treasury Secretary Mnuchin and Chinese Vice Premier Liu He in Washington. Asian stocks settled mostly lower: Japan -0.21%, Hong Kong -1.23%, China +0.57%, Taiwan -0.71%, Australia -0.61%, Singapore -0.62%, South Korea -0.87%, India -0.04%. China's Shanghai Composite bucked the weakness in Asian markets and rose to a 1-month high on signs of strength in manufacturing activity after China Apr industrial production rose +7.0% y/y, the largest increase in 10-months.

The dollar index (DXY00 +0.40%) is up +0.22% as an increase in the 10-year T-note yield to a 2-week high of 3.01% boosts the dollar's interest rate differentials. EUR/USD (^EURUSD -0.30%) is down -0.21%. USD/JPY (^USDJPY +0.25%) is up +0.21%.

Jun 10-year T-note prices (ZNM18 -0-065) are down -5 ticks at a 2-week low.

Eurozone Mar industrial production rose +0.5% m/m, weaker than expectations of +0.7% m/m.

The German May ZEW expectations of economic growth was unch at -8.2, right on expectations.

German Q1 GDP rose +0.3% q/q and +2.3% y/y, weaker than expectations of +0.4% q/q and +2.4% y/y.

China Apr industrial production rose +7.0% y/y, stronger than expectations of +6.4% y/y and the largest increase in 10-months.

China Apr retail sales rose +9.4% y/y, weaker than expectations of +10.0% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) Dallas Fed President Robert Kaplan (non-voter) discusses the outlook for the energy market and the economy to the Council on Foreign Relations, (2) May Empire manufacturing survey general business conditions (expected -0.8 to 15.0, Apr -6.7 to 15.8), (3) Apr retail sales (expected +0.3% and +0.5% ex autos, Mar +0.6% and +0.2% ex autos), (4) Mar business inventories (expected +0.1%, Feb +0.6%), (5) May NAHB housing market index (expected unch at 69, Apr -1 to 69), (6) Richard Clarida, nominated to be Fed vice chairman, and Michelle Bowman, nominated to be Fed governor, appear for their confirmation hearings before the Senate Banking Committee, (7) San Francisco Fed President John Williams (voter) speaks to the Economic Club of Minnesota.

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