Morning Call For Tuesday, Oct. 2

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Overnight Markets And News

Dec E-mini S&Ps (ESZ18 -0.26%) this morning are down -0.20% and European stocks are down -0.93% at a 1-week low on ramped-up Italian political concerns. EUR/USD (^EURUSD -0.42%) slumped to a 1-month low and the yield on Italy’s 10-year government bond surged to a 4-1/2 year high of 3.4% after Claudio Borghi, head of the budget committee in Italy’s lower house, said Italy would have solved its fiscal problems if it had its own currency. European Commission President Juncker responded by saying “recent announcements by the Italian government have raised concerns about its budgetary course” as he warned of a Greek-style crisis in Italy. Stock prices recovered from their worst levels after Italian Deputy Prime Minister Di Maio said the Italian government is not willing to exit the euro or the EU. The political turmoil in Italy prompted a rush to safety to German bunds as the 10-year bund yield fell to a 2-week low of 0.408%. Asian stocks settled mostly lower: Japan +0.10%, Hong Kong -2.36%, China and India closed for holidays, Taiwan -1.20%, Australia -0.75%, Singapore -0.39%, South Korea -1.21%. Japan’s Nikkei Stock Index posted a fresh 26-3/4 year high after Japan Sep consumer confidence unexpectedly rose and after USD/JPY soared to a 10-3/4 month high Monday, which fueled a rally in Japanese exporter stocks.

The dollar index (DXY00 +0.34%) is up +0.37% at a 4-week high. EUR/USD (^EURUSD -0.42%) is down -0.45% at a 1-month low on Italian political risks. USD/JPY (^USDJPY -0.10%) is down -0.11%.

Dec 10-year T-note prices (ZNZ18 +0-035) are up +4 ticks.

The UK Sep Markit/CIPS construction PMI unexpectedly fell -0.8 to a 6-month low of 52.1, weaker than expectations of no change at 52.9.

Eurozone Aug PPI of +0.3% m/m and +4.2% y/y was stronger than expectations of +0.2% m/m and +3.8% y/y.

Japan Sep consumer confidence unexpectedly rose +0.1 to 43.4, stronger than expectations of -0.2 to 43.1.

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