Jun E-mini S&Ps this morning are up +0.06% as better-than-expected quarterly earnings results from Honeywell and GE gives the overall market a boost. European stocks are little changed, down -0.06%, as the markets await Sunday's first round of presidential elections in France that are too close to call. Losses in European stocks were limited after Eurozone Apr manufacturing activity unexpectedly expanded. Asian stocks settled mostly higher: Japan +1.03%, Hong Kong -0.06%, China +0.03%, Taiwan +0.88%, Australia +0.56%, Singapore +0.06%, South Korea +0.82%, India -0.19%. Japan's Nikkei Stock Index rose to a 1-week high on signs the BOJ will continue with its overly easy monetary policies after BOJ Governor Kuroda said the BOJ will maintain its current pace of asset purchases for some time and that "it's premature to discuss in an exact way about exit strategy." The BOJ meets next week and will update its estimates for growth and consumer prices.
The dollar index is up +0.13%. EUR/USD is down -0.16%. USD/JPY is down -0.21%.
Jun 10-year T-note prices are up +2.5 ticks.
The Eurozone Apr manufacturing PMI unexpectedly rose +0.6 to 56.8, stronger than expectations of -0.2 to 56.0 and the fastest pace of expansion since the data series began in 2014. The Mar Markit composite PMI rose +0.3 to 56.7, stronger than expectations of unch at 56.4 and the fastest pace of expansion since the data series began in 2014.
Key news today includes: (1) Minneapolis Fed President Neel Kashkari (voter) participates in a Q&A at the Hamline University Community Economic Development Symposium in St. Paul, MN, (2) Apr Markit manufacturing PMI (expected +0.5 to 53.8, Mar -0.9 to 53.3) and Apr Markit services PMI (expected +0.4 to 53.2, Mar -1.0 to 52.8), (3) Mar existing home sales (expected +2.2% to 5.60 million, Feb -3.7% to 5.48 million), (4) USDA Mar Cattle on Feed.
Jun E-mini S&Ps this morning are up +1.50 points (+0.06%). Thursday's closes: S&P 500 +0.76%, Dow Jones +0.85%, Nasdaq +0.81%. The S&P 500 on Thursday rallied to a 1-week high and closed higher on the -49,000 decline in U.S. weekly continuing unemployment claims to 1.979 million (a bigger drop than expectations of -4,000 to 2.024 million and the fewest in 17-years) and the +0.4% gain in U.S. Mar leading indicators (stronger than expectations of +0.2%). Stocks also found support on stronger-than-expected quarterly earnings results from CSX and American Express.
Jun 10-year T-notes this morning are up +2.5 ticks. Thursday's closes: TYM7 -10.50, FVM7 -6.75. Jun 10-year T-notes on Thursday closed lower on negative carry-over from a drop in German bunds to a 2-week low on reduced political risks in France after polls showed pro-EU candidate Macron leading before Sunday's first round of France's presidential election. T-notes were also undercut by reduced safe-haven demand due to the rally in stocks.
The dollar index this morning is up +0.125 (+0.13%). EUR/USD is down -0.0017 (-0.16%) and USD/JPY is down -0.23 (-0.21%). Thursday's closes: Dollar index +0.40 (+0.40%), EUR/USD +0.0006 (+0.06%), USD/JPY +0.46 (+0.42%). The dollar index on Thursday recovered from a 3-week low and closed higher on weakness in the yen as USD/JPY rose to a 1-week high after BOJ Governor Kuroda said that the current pace of BOJ asset purchases will continue for some time. The dollar was also boosted by higher T-note yields on Thursday, which slightly boosted the dollar's interest rate differentials. A bearish factor was strength in EUR/USD which rallied to a 3-week high on reduced political risks from France after the latest polls show pro-EU candidate Macron with a slight lead in France's presidential election.
Jun WTI crude oil prices this morning are up +2 cents (+0.04%) and Jun gasoline is +0.0054 (+0.32%). Thursday's closes: Jun crude -0.14 (-0.28%), Jun gasoline +0.0079 (+0.47%). Jun crude oil and gasoline on Thursday settled mixed. Crude oil prices were boosted by the fall in the dollar index to a 3-week low and by comments from Saudi Arabia's Oil Minister Khalid Al-Falih who said an "initial agreement" was reached to extend OPEC supply cuts past Jun. The main bearish factor is ramped up U.S. crude production that offsets OPEC output cuts as Wednesday's EIA data showed a +0.2% increase in U.S. crude production in the week of Apr 14 to a 1-1/2 year high of 9.252 million bpd.
Metals prices this morning are mixed with Jun gold +0.2 (+0.02%), May silver -0.068 (-0.38%), and May copper +0.004 (+0.16%). Thursday's closes: Jun gold +0.4 (+0.03%), May silver -0.144 (-0.79%), May copper +0.0075 (+0.30%). Metals on Thursday settled mixed with May silver at a 1-week low. Metals prices were undercut by the rally in stocks, which reduced safe-haven demand for precious metals. Gold was also undercut by a slight easing of French political risks after the latest polls showed pro-EU candidate Macron gaining a little ground in France's presidential election. The major bullish factor was the slide in the dollar index to a 3-week low.
Grains this morning are mostly higher with May corn unch, May soybeans +2,75 (+0.29%), May wheat +0.25 (+0.06%). Grains on Thursday closed lower with May corn at a 1-week low and May wheat at a 3-1/2 month low: May corn -4.0 (-1.11%), May soybeans -3.50 (-0.37%), May wheat -12.75 (-3.04%). Bearish factors included (1) forecasts for warm, dry conditions in the Midwest over the next week, which should allow farmers to speed up the pace of their corn plantings, and (2) improved moisture levels in the Great Plains, which should boost U.S. winter wheat yields. May soybeans fell to a 1-year low last Tuesday after the USDA raised its global 2016/17 soybean production estimate to a record 345.97 MMT and on Mar 31 projected that U.S. soybean acreage this year will be a record 89.5 mln acres. Expectations for a record Brazil soybean crop is another negative for soybeans after researcher Celeres raised its 2016/17 Brazil soybean crop estimate to a record 113.8 MMT from 109.65 MMT. On the positive side, the USDA raised its 2016/17 China soybean import estimate to a record 88 MMT from a Mar estimate of 87 MMT. Chinese soybean demand for soybeans is strong as China's Customs data shows China Jan-Mar soybean imports are up +20% y/y to 19.52 MMT. Monday's USDA weekly Crop Progress report showed 6% of the U.S. corn crop planted as of Apr 16, below the 5-year vg of 9%.
Livestock prices on Thursday settled mixed: Jun live cattle +0.525 (+0.45%), Jun lean hogs -1.275 (-1.82%). Jun cattle prices Thursday rallied to a new contract high and nearest-futures (J17) posted a 1-yr high. Fund buying is propelling cattle prices on speculation China may soon begin importing U.S. beef, which it halted back in 2003 due to a case of mad cow disease found in the U.S. Foreign demand has already strengthened after the USDA reported that U.S. Jan-Feb beef exports are up +20.1% y/y to 416.870 mln lbs. Also, speculation has risen that China may soon begin importing U.S. beef, which it halted back in 2003 due to a case of mad cow disease found in the U.S. Supplies are ample as USDA slaughter data shows 8.179 mln head of cattle processed this year through Apr 8, up +6.1% y/y. The Mar 24 USDA Cattle on Feed report was bullish as it showed cattle on feed as of Mar 1 was unch y/y at 10.77 million head, less than expectations of +0.2% y/y, and cattle placements in feedlots during Feb unexpectedly fell -0.9% y/y to 1.694 million, less than expectations of a +0.2% y/y increase. The Mar 22 USDA Cold Storage report was supportive as it showed beef supplies in cold storage in Feb fell -6.6% m/m and -0.8% y/y to 502.429 mln lbs. Domestic beef demand had plunged after wholesale beef prices in mid-Oct fell a 4-year low, which pressured cattle prices as nearest-futures (V16) cattle slumped to a 6-year low on Oct 13. The USDA projects U.S. 2016/17 beef production to climb +5.1% y/y to an 8-year high of 26.564 bln lbs and projects U.S. 2017 beef exports to climb +6.9% y/y to a 5-year high of 2.725 bln lbs.
Jun lean hog prices on Thursday tumbled to a 6-month low on demand concerns as cash hog prices dropped to a 3-1/2 month low. Signs of bigger future pork supplies have also pressured hog prices as the Mar 30 USDA Q1 Hogs & Pigs report showed the U.S. pig herd as of Mar 1 rose +4.2% y/y to 70.976 mln, more than expectations for a +3.4% y/y increase, and that sows retained for breeding as of Mar 1 rose +1.5% y/y to 6.068 mln, higher than expectations of +1.4% y/y. In addition, there were a record 10.43 piglets per litter in Q1. Jun live hogs on Feb 8 had rallied to an 8-1/2 month high on strength in pork belly prices which soared to a 2-3/4 year high on tight supplies after the Jan USDA Cold Storage report showed pork belly supplies in Jan plunged -77% y/y to 14.01 mln lbs, the lowest on record for a Jan since data began in 1957. The Mar 22 USDA Cold Storage report was mixed as it showed pork supplies in cold storage in Feb rose +9.1% m/m but fell -9.1% y/y to 571.966 mln lbs. Nearest-futures (Z16) hogs plunged to a 14-year low last Oct on abundant supplies and weak demand. The USDA projects that U.S. 2016/17 pork production will rise +4.6% y/y to a record 26.111 bln lbs and that 2016/ 17 U.S. pork exports will climb +8.4% y/y to a record 5.670 billion lbs. U.S. Jan-Feb pork exports are up +18% y/y at 908.156 mln lbs.
Softs this morning are mixed with May sugar +0.05 (+0.31%), May coffee +0.25 (+0.19%), Jul cocoa +27 (+1.50%), and May cotton -0.20 (-0.25%). Softs on Thursday settled mixed: May sugar -0.09 (-0.55%), May coffee -6.35 (-4.60%), Jul cocoa -74 (-3.95%), May cotton +2.40 (+3.09%). May sugar on Thursday closed lower but remained above Tuesday's 2-week low. May sugar fell to that 2-week low after India's National Federation of Cooperative Sugar Factories predicted 2017/18 sugar production in India, the world's second biggest producer, will climb +25% y/y to 25 MMT as normal rains last year helped the sugar crop. Current supplies are ample as data from Unica show that 35.628 MMT of sugar was produced in Brazil's Center South in the 2016/17 season through Mar, up +14.1% y/y. May sugar on Apr 5 fell to an 11-1/4 month nearest-futures low on signs of abundant current supplies and expectations for larger global output. Researcher Wilmar predicts Thailand 2017/18 sugar production may climb to a record 12 MMT. Supply concerns have eased after the ISO late last month lowered its global 2016/17 sugar deficit estimate to 5.87 MMT from a Nov estimate of 6.19 MMT. Sugar prices had posted a 4-year nearest-futures high (V16) on Sep 29 on supply concerns as the ISO projects a 2016/17 stocks-to-consumption ratio of 43.2%, the lowest in 6 years.
May coffee prices on Thursday plunged to a 3-3/4 month low as signs of ample supplies prompted fund selling. ICE-monitored coffee inventories on Tuesday rose to 1.411 mln bags, a 1-year high, while data from the Green Coffee Association showed U.S. Mar coffee inventories rose +11.5% y/y to a 23-year high of 6.725 mln bags. Also, ICO data showed global coffee exports from Oct-Feb jumped +6.7% y/y to 49.52 mln bags. In addition, Columbia reported its Feb coffee exports rose +7% y/y to 1.19 mln bags. May coffee on Tuesday had risen to a 2-week high on Brazil crop concerns after Somar Meteorologia said rains over the past week in Brazil's biggest arabica growing region were only 21% of the historical average. Nearest-futures (Z16) coffee on Nov 15 had surged to a 2-year high on supply concerns. Conab said it sees Brazil's 2017 coffee output falling as much as 15% to 43.7 mln bags from 51.4 mln bags in 2016 as crops are in their lower-yielding half of their 2-year cycle. Also, Cecafe predicts that Brazil 2017 coffee exports will fall -5.9% y/y to 32 million bags due to a lower-yielding coffee crop.
Jul cocoa prices on Thursday sold-off to a new contract low and nearest-futures (K17) plunged to a 9-1/2 year low. Fund selling continues to pummel cocoa prices on signs of robust supplies amid weak demand. Ivory Coast farmers sent 1.526 MMT of cocoa beans to ports from Oct 1-Apr 16, up +18% y/y, while ICE-monitored cocoa supplies on Monday rose to a 2-3/4 year high of 5.102 mln bags. Also, data from IRI shows U.S. Mar chocolate candy sales tumbled -29.8% y/y. The ICCO projects a +14.8% y/y increase in 2016/17 global cocoa production to 4.552 MMT with a +264,000 MT surplus, the biggest in 6-yrs. ICCO projects Ivory Coast 2016/17 cocoa output to jump +20% y/y to a record 1.9 MMT and Ghana cocoa output to climb +4% to 850,000 MT. Demand is weak as data from the National Confectioners Association reported that North America Q4 cocoa grindings unexpectedly fell -1.1% y/y to 117,588 MT, weaker than expectations of an increase of +1.7% y/y and the lowest for a Q4 in 6 years. On the positive side, Q1 European cocoa processing rose +1.1% to 339,485 MT, close to expectations, and Q4 Asian cocoa processing jumped +16.9% y/y to 188,493 MT. Also, the ICCO predicts the 2015/16 global cocoa stockpiles-to-grindings ratio may fall to a 31-year low of 34.9%.
May cotton on Thursday surged to a 2-3/4 year nearest-futures high on fund buying spurred on by concern that heavy rains that have flooded fields in the U.S. South will delay U.S. cotton plantings. Also, foreign demand for U.S. cotton is strong as USDA export data shows U.S. cumulative cotton exports this marketing year through Apr 13 up +77.2% y/y. The USDA on Apr 11 cut its U.S. 2016/17 cotton ending stocks estimate to 3.7 million bales, a bigger cut than expectations of 4.1 mln bales, as they raised their U.S. 2016/17 cotton export estimate to 14.0 mln bales, a 6-year high. The China Cotton Association reported that Chine Feb cotton imports rose +146% y/y as imports from the U.S. surged +444% y/y at 64,800 MT. Chinese cotton demand had been weak as Chinese customs data showed China 2016 cotton imports sank -39% y/y to 896,600 MT.
Global Calendar – Friday 4/21/17
|US||0930 ET||Minneapolis Fed President Neel Kashkari (voter) participates in a Q&A at the Hamline University Community Economic Development Symposium in St. Paul, MN.|
|0945 ET||Apr Markit manufacturing PMI expected +0.5 to 53.8, Mar -0.9 to 53.3. Apr Markit services PMI expected +0.4 to 53.2, Mar -1.0 to 52.8.|
|1000 ET||Mar existing home sales expected +2.2% to 5.60 million, Feb -3.7% to 5.48 million.|
|1500 ET||USDA Mar Cattle on Feed.|
|JPN||0030 ET||Japan Feb tertiary industry index expected +0.3% m/m, Jan unch m/m.|
|FRA||0300 ET||France Apr Markit manufacturing PMI expected -0.2 to 53.1, Mar +1.1 to 53.3. Apr Markit services PMI expected -0.5 to 57.0, Mar +1.1 to 57.5.|
|GER||0330 ET||German Apr Markit/BME manufacturing PMI expected -0.3 to 58.0, Mar +1.5 to 58.3. Apr Markit services PMI expected -0.1 to 55.5, Mar +1.2 to 55.6.|
|EUR||0400 ET||Eurozone Apr Markit manufacturing PMI expected -0.2 to 56.0, Mar +0.8 to 56.2. Apr Markit composite PMI expected unch at 56.4, Mar +0.4 to 56.4.|
|ITA||0400 ET||Italy Feb industrial orders, Jan -2.9% m/m and +8.6% y/y. Feb industrial sales, Jan -3.5% m//m and +1.5% y/y.|
|UK||0430 ET||UK Mar retail sales ex auto fuel expected -0.5% m/m and +3.8% y/y, Feb +1.3% m/m and +4.1% y/y. Mar retail sales including auto fuel expected -0.3% m/m and +3.3% y/y, Feb +1.4% m/m and +3.7% y/y.|
|CAN||0830 ET||Canada Mar CPI expected +0.4% m/m and +1.8% y/y, Feb +0.2% m/m and +2.0% y/y. Mar core CPI expected +1.3% y/y, Feb +1.3% y/y.|
Sunday, Apr 23
|UK||1901 ET||UK Apr Rightmove house prices, Mar +1.3% m/m and +2.3% y/y.|
|FRA||n/a||First round of French presidential election.|