Morning Call For Wednesday, August 9


Sep E-mini S&Ps (ESU17 -0.38%) this morning are down -0.33% at a 1-1/2 week low and European stocks are down -1.40% as global equity markets slide on heightened geopolitical tensions between the U.S. and North Korea. President Trump warned that North Korea would face "fire and fury" from the U.S. if North Korea continued to make threats against the U.S. and North Korean President Kim Jong-Un countered by saying North Korea was examining an operational plan for firing a ballistic missile toward Guam. The saber-rattling between the two countries pushed the VIX volatility index up to a 1-month high. Asian stocks settled mostly lower: Japan -1.29%, Hong Kong-0.35%, China -0.19%, Taiwan -0.93%, Australia +0.38%, Singapore closed for holiday, South Korea -1.24%, India -0.68%. Japan's Nikkei Stock Index tumbled to a 2-1/4 month low as exporter stocks sold off due to strength in the yen. USD/JPY (^USDJPY) dropped to a 1-3/4 month low as increased geopolitical risks between the U.S. and North Korea fueled safe-haven demand for the yen. The Chinese yuan rose to a 10-1/4 month high against the dollar after the PBOC raised its daily reference rate by +0.16%.

The dollar index (DXY00 -0.04%) is down -0.03%. EUR/USD (^EURUSD) is down -0.16%. USD/JPY (^USDJPY) is down -0.43% at a 1-3/4 month low.

Sep 10-year T-note prices (ZNU17 +0.27%) are up +8.5 ticks.

China Jul CPI rose +1.4% y/y, weaker than expectations of +1.5% y/y. Jul PPI rose +5.5%, weaker than expectations of +5.6% y/y.


Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -2.8% with purchase sub-index -2.0% and refi sub-index -3.8%), (2) Q2 non-farm productivity (expected +0.7%, Q1 unch) and Q2 unit labor costs (expected +1.0%, Q1 +2.2%), (3) revised Jun wholesale inventories (prelim-Jun +0.6%) and Jun wholesale trade sales (expected unch, May -0.5% m/m), (4) Treasury auctions $23 billion of 10-year T-notes, (5) EIA Weekly Petroleum Status Report.

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Disclosure: None.

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