Morning Call For Wednesday, Dec. 19

Overnight Markets And News

Mar E-mini S&Ps (ESH19 +0.87%) this morning are up +0.83% on optimism a resolution to the China-U.S. trade rift can be found after China's Ministry of Commerce said both sides have held several rounds of talks in recent weeks and that they plan to hold a formal, face-to-face meeting in Jan. U.S. Treasury Secretary Mnuchin said both sides are focused on trying "to document an agreement" by a Mar 1 deadline for their current tariffs truce to run out. The FOMC is expected to raise the funds rate target by 25 bp at the conclusion of today's policy meeting, although the 10-year T-note yield slid to a 6-1/2 month low of 2.798% today on expectations the FOMC will signal a slower pace or even a pause in interest rate hikes next year. European stocks are up +0.66% as Italian bank stocks rallied after the European Commission decided against launching a disciplinary procedure against Italy over its budget and said that concessions by Italy on its budget meant the country didn't warrant triggering the excessive deficit procedure. Asian stocks settled mostly lower: Japan -0.60%, Hong Kong +0.20%, China -1.05%, Taiwan +0.66%, Australia -0.16%, Singapore +0.43%, South Korea +0.60%, India +0.38%. Asian markets followed the slide in the S&P 500 Tuesday to a fresh 14-1/2 month low as the Shanghai Composite fell to a 1-1/2 month low and the Nikkei Stock Index dropped to an 8-1/2 month low.

The dollar index (DXY00 -0.28%) is down -0.31%. EUR/USD (^EURUSD +0.33%) is up +0.35% at a 1-week high. USD/JPY (^USDJPY -0.15%) is down -0.16% at a 1-1/2 month low.

Mar 10-year T-note prices (ZNH19 +0-010) are up +2 ticks at a new contract high.

The Japan Nov trade balance was in deficit by -737.3 billion yen, wider than consensus of -630.0 billion yen and the largest deficit in 10 months. Nov exports rose +0.1% y/y, weaker than expectations of +1.2% y/y. Nov imports rose +12.5% y/y, stronger than expectations of +11.8% y/y.

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