3SOF

Tuesday, May 3, 2011...

Overnight Developments

•   Global stocks are mostly lower with the European Euro Stoxx 50 down -0.69% and June S&Ps down -15.70 points. Stock prices are correcting lower while the dollar and Treasuries are stronger and most commodities are weaker. European markets are being led lower by a drop in auto makers with Volkswagen down 3.8%, Bayerische Motoren Werke AG down 2.7% and Daimler AG off by 2.3%. Credit Suisse Group AG cut its price estimate for Daimler by 7.7% to 60 euros, citing a "disappointing set of Q1 numbers." Also undercutting automakers was the report in the Financial Times Deutschland that said the German environment ministry found flaws in the taxation of company cars and that they deny the government as much as 5 billion euros ($7.4 billion) in tax revenue. European producer-price inflation unexpectedly quickened in March after the Mar Euro-Zone PPI accelerated to a +6.7% y/y gain, its fastest pace of increase in 2-1/2 years. The British pound tumbled against the dollar after the Apr UK PMI manufacturing index fell a more-than-expected -2.3 to 54.6, its lowest level of expansion in 7 months.



•   The Asian stock markets today closed mostly lower with Japan closed for Golden Week, Hong Kong -0.37%, China +0.58%, Taiwan -0.69%, Australia -0.84%, Singapore -0.83%, South Korea -1.25%, India -2.44%. India's Bombay Sensex 30 Stock Index closed sharply lower after the Reserve Bank of India (RBI) raised the repurchase rate by a more-than-expected 50 bp to 7.25% after forecasting inflation will stay at an "elevated level" until at least Sep. RBI Governor Subbarao said the central bank has given up its "baby step" approach on changing interest rates after wholesale-price inflation accelerated to 8.98% in Mar and exceeded the central bank's 8% estimate. Australia's central bank left its overnight cash rate at 4.75% for a fifth meeting with RBA Governor Stevens saying "the rising exchange rate will be helping to hold down prices for some consumer products over the coming few quarters."

Wednesday, May 4, 2011...

Overnight Developments

•   Global stocks are mostly lower with the European Euro Stoxx 50 down -0.54% and June S&Ps down -1.70 points. Treasuries are mixed while the dollar and commodities are weaker, as copper fell to a 3-week low on concerns China may further tighten its monetary policy. The euro rose against the dollar when Portugal's government announced an agreement on a 78 billion-euro ($116 billion) 3-year loan package. The yield on the 10-year Portuguese bond fell 18 bp and the difference in yield versus bunds narrowed to 610 bp, the least since April 21. Portugal last month became the third Euro-Zone country to request EU aid after Greece and Ireland. European stocks were undercut after Mar Euro-Zone retail sales fell -1.0% m/m, more than expectations of a -0.1% m/m fall and the biggest drop in 11 months.



•   The Asian stock markets today closed mostly lower with Japan closed for holiday, Hong Kong down -1.35%, China -2.56%, Taiwan +0.01%, Australia -0.93%, Singapore -1.26%, South Korea -1.09%, India -0.35%. China's Shanghai Stock Index tumbled to a 1-1/2 month low on concern that further interest rate hikes may cut profits and growth when the PBOC said in its Q1 monetary policy report that stabilizing prices and managing inflation expectations are "critical," and that the economy faces "increasing pressure from imported inflation." The China Securities Journal said the PBOC may boost banks' reserve requirements this month, while the Shanghai Securities News said that government officials may expand controls on the property market to more cities. Most Asia-Pacific stock markets closed lower, led by declines in raw-material and energy producers, as metals and crude oil fell.

Thursday, May 5, 2011...

Overnight Developments

•   Global stocks are mostly lower with the European Euro Stoxx 50 down -0.85% and June S&Ps down -4.50 points. Treasuries are firmer and the dollar is little changed, while commodities are weaker with crude oil sliding to a 2-week low. Mar German factory orders unexpectedly declined -4.0% m/m, the biggest monthly fall in 2 years, which undercut European stocks and sent copper tumbling to a 5-month low. The BOE as expected maintained its benchmark interest rate at 0.50% and kept its asset purchase plan at 200 billion pounds. The market now awaits in earnest the ECB meeting later today and comments from ECB President Trichet into just how fast he's prepared to raise interest rates over the coming months. A sell-off in bank stocks is leading European shares lower with Lloyds Banking Group Plc plunging 8.2% after Britain's largest mortgage lender reported a Q1 loss after setting aside 3.2 billion pounds ($5.3 billion) to compensate clients mis-sold insurance on loa ns, while Societe Generale lost 3.7% after reporting Q1 net income of 916 million euros, below analysts' estimates of 1.06 billion euros.



•   The Asian stock markets today closed mixed with Japan closed for holiday, Hong Kong -0.23%, China -0.09%, Taiwan +0.80%, Australia +0.29%, Singapore -0.13%, South Korea closed for holiday, India -1.40%. Asian stocks were undercut after lower-than-expected growth in US service industries and jobs sparked concern the US economy is weakening. March Australia retail sales unexpectedly fell -0.5% m/m, its first drop in 5 months, and weaker than expectations for a +0.5% m/m increase. The Japanese yen strengthened to less than 80 yen per dollar for the first time in 1-1/2 months, which increases the chances of further intervention in currency markets by Japanese and or G-7 central banks to stem the yen's strength.

Friday, May 6, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 up +0.23% and June S&Ps up +3.80 points. Treasuries and the dollar are little changed while commodities extended this week's fall with crude oil sliding to a 2-1/4 month low and copper dropping to a 5-month low on concern economic growth is faltering. ECB President Trichet said policy makers remain "extremely alert" on inflation, and indicated they may take further decisions on interest rates when they have new economic projections in June. European stocks received a boost after German industrial production rose for a third month. Mar German industrial production rose +0.7% m/m and +11.2% y/y, stronger than expectations of +0.5% m/m and +10.3% y/y.



•   The Asian stock markets today closed mostly lower with Japan down -1.45%, Hong Kong -0.44%, China -0.15%, Taiwan -0.46%, Australia -0.23%, Singapore -0.33%, South Korea -1.66%, India +1.69%. Asian stock markets fell, with China's Shanghai Stock Index declining to a 2-1/2 month low, after the surge in US jobless fueled concern the world's biggest economy may be weakening. Japanese exporters led declines in Japanese stocks as the yen held just below a 1-1/2 month high and most Asian energy and raw material producers fell as commodities extended their slide. The Australian dollar strengthened after the RBA in its quarterly review today said higher interest rates will likely be needed "at some point" to contain inflation that's predicted to accelerate this year faster than previously forecast. The RBA hiked its forecast for consumer prices this year to increase by +3.25% from an earlier estimate of +3.00% and core inflation to quicken to +3.00% from +2.75%.

Monday, May 9, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 down -0.64% and June S&Ps are up +6.20 points. The dollar and Treasuries are lower and commodities are higher with crude oil up over +$3.00 a barrel. Weakness in banks is leading European stocks lower on increased European sovereign-debt concerns with credit-default swaps insuring Greek government debt for 5 years climbing 19 bp to a record 1,360 bp. In an unannounced meeting on May 6, the European Union agreed to review the terms of the 110 billion-euro ($158 billion) bailout plan that Greece received last year with Jean-Claude Juncker, head of the European finance ministers, saying Greece "does need a further adjustment program." Also undercutting stock prices was the decline in the May Euro-Zone Sentix investor confidence which fell -3.3 to 10.9, its lowest level in 4 months and greater-than-expectation of a -0.4 decline to 13.8. The euro strengthened against the dollar after Mar German ex ports surged +7.3% m/m to 98.3 billion euros ($141.4 billion), stronger than expectations of +1.1% m/m and the most since records began in 1950.



•   The Asian stock markets today closed mixed with Japan down -0.66%, Hong Kong +0.76%, China +0.27%, Taiwan +0.65%, Australia +0.29%, Singapore +1.21%, South Korea -0.38%, India +0.05%. Asian energy-related and raw-material producing stocks closed higher after US jobs growth bolstered confidence in the economic outlook and halted a rout in commodity prices. Japanese stocks finished lower, led by declines among power companies, after Japanese Prime Minister Kan asked Chubu Electric Power to shut its Hamaoka nuclear plant because it was located close to an earthquake fault-line. Prime Minister Kan cited a government study that shows an 87% likelihood of a magnitude-8 quake striking the area within 30 years.

Tuesday, May 10, 2011...

Overnight Developments

•   Global stocks are mostly higher with the European Euro Stoxx 50 up +0.90% and June S&Ps up +5.80 points. The dollar is higher and Treasuries are weaker, while commodities are mixed. European stocks received a boost after the Greek newspaper Kathimerini reported that the IMF is arranging a package of as much as 100 billion euros ($144 billion) to replace Greece's existing bailout, while ECB Executive Board member Bini Smaghi said allowing a Euro-Zone member to default on or restructure its debt would be "wrong." The cost to insure European sovereign debt fell for the first time in 4 days, with the Markit iTraxx SovX Index of credit-default swaps on 15 European governments falling 5.5 bp to 190 bp. The euro fell against the dollar after Mar French industrial production unexpectedly declined -0.9% m/m, weaker than expectations of a +0.4% m/m increase.



•   The Asian stock markets today closed mixed with Japan up +0.25%, China +0.75%, Taiwan -0.14%, Australia -0.65%, Singapore +0.62%, India -0.09%. China's Shanghai Stock Index closed higher and boosted other Asia-Pacific stock markets after Apr China exports climbed +29.9% to a record $156 billion, stronger than expectations of a +29.5% y/y increase. China's Apr trade balance rose to the highest this year as it surged to +$11.42 billion, higher than expectations of +$3.20 billion. The PBOC set the yuan's reference rate at 6.495 per dollar, a record high for the third day ahead of the final day of an annual economic meeting between US and Chinese officials in Washington. Asian stocks also received a lift from strength in commodity prices, which prompted gains in energy and raw-material producers and bolstered confidence in the global economic outlook.

Wednesday, May 11, 2011...

Overnight Developments

•   Global stocks are mostly higher with the European Euro Stoxx 50 up +0.63% and June S&Ps up +1.40 points. The dollar is higher, Treasuries are weaker and commodities are mixed. The British pound rose against the dollar after the BOE said that inflation remains "uncomfortably high." In its quarterly inflation report, the BOE said "there is a good chance that inflation will reach 5% this year and it is more likely than not to remain above the 2% target throughout 2012." The euro weakened against the dollar on speculation European leaders are slowing the drive to grant Greece additional aid after German Chancellor Merkel said Greece needs to stay the course on its budget-cutting program to deserve an extension of the 110 billion-euro ($158 billion) bailout granted last year. German inflation accelerated more than estimated last month after the Apr German CPI was revised up to +2.7% y/y, higher than the +2.6% y/y originally reported and a 2-1/ 2 year high.



•   The Asian stock markets today closed mixed with Japan up +0.46%, Hong Kong -0.19%, China -0.26%, Taiwan -0.03%, Australia +1.15%, Singapore +0.66%, South Korea +1.31%, India +0.39%. Japanese stocks closed higher, led by gains in exporters, after the yen weakened against the dollar, while Chinese stocks closed lower after inflation rose more than expected and China's factory output rose less than expected. Apr China consumer prices climbed +5.3% y/y, stronger than expectations of +5.2% y/y, while Apr China industrial production rose +13.4% y/y, weaker than expectations of +14.6% y/y. The PBOC may be prompted to tighten monetary policy further after new lending in China also exceeded expectations with Apr China new loans at 739.6 billion yuan ($114 billion), higher than estimates of 700 billion yuan. South Korea's Kospi Stock Index closed higher after South Korea's unemployment rate fell to a 3-month low of 3.6% in Apr.

Thursday, May 12, 2011...

Overnight Developments

•   Global stocks are lower with the European Euro Stoxx 50 down -1.13% and June S&Ps down -7.00 points. The dollar and Treasuries are stronger, with the dollar index at a 3-1/2 week high, while commodities slumped, with copper dropping to a 5-1/4 month low. Crude oil declined over -$2 a barrel after the IEA cut its 2011 global oil demand forecast by -190,000 barrels a day saying "high oil prices have finally begun to dent demand." Stock prices fell as China raised banks reserve ratio requirements again and after European factory output unexpectedly declined in March. Mar Euro-Zone industrial production fell -0.2% m/m and rose +5.3% y/y, weaker than expectations of +0.3% m/m and +6.3% y/y. The euro slipped to a 1-1/4 month low against the dollar amid speculation Greece may have to restructure its debt after ECB Executive Board member Tumpel-Gugerell said other countries will be asked to help Greece as the country will need "longer" to be able to refinance itself via the markets. The British pound fell to a 3-week low against the dollar after Mar UK industrial production increased +0.3% m/m and +0.7% y/y, weaker than expectations of +0.7% m/m and +1.1% y/y.



•   The Asian stock markets today closed mostly lower with Japan down -1.50%, Hong Kong -0.94%, China -1.38%, Taiwan +0.15%, Australia -1.76%, Singapore -1.47%, South Korea -2.19%, India -1.34%. A slump in commodities fueled declines in Asia-Pacific markets led by losses in mining companies and raw material producers on concern demand for commodities will wane as global central banks tighten their monetary policies. The Australian dollar fell as markets cut back their expectations for an RBA rate hike next month after Apr Australian employment unexpectedly fell -22,100, weaker than an expected increase of +17,000 and the biggest decline in 2 years. After the Asian markets closed, the PBOC raised banks' reserve requirements by 50 bp to 21% for the biggest lenders effective May 18.

Friday, May 13, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 down -0.07% and June S&Ps up +1.80 points. The dollar and Treasuries are weaker and most commodities are higher as economic growth in Europe exceeded forecasts. Q1 French GDP rose +1.0% q/q and +2.2% y/y, stronger than expectations of +0.6% q/q and +1.8% y/y, while Q1 German GDP expanded +1.5% q/q and +4.9% y/y, higher than expectations of +0.9% q/q and +4.5% y/y. The euro rose against the dollar as Q1 Euro-Zone GDP rose +0.8% q/q and +2.5% y/y, stronger than expectations of +0.6% q/q and +2.2% y/y as booming exports fueled domestic spending and offset turmoil sparked by debt woes in Greece, Ireland and Portugal. Also underpinning the euro was the action by the European Commission to raise its inflation forecast for the Euro-Zone this year, which adds pressure to the ECB to raise borrowing costs further. In its European Economic Forecast published today, the commission raised its 2011 Euro-Zone inflatio n estimate to 2.6% from a previous projection of 2.2%. Limiting gains in European stocks was the action by the European Commission to raise its estimate for Greece's budget deficit to 9.5% of GDP in 2011, higher than the 7.4% target adopted by the EU and the IMF in last years bailout, which may fuel calls for a new rescue package to help Greece stave off default.



•   The Asian stock markets today closed mixed with Japan down -0.70%, Hong Kong +0.88%, China +0.85%, Taiwan -0.30%, Australia +0.33%, Singapore +1.06%, South Korea -0.15%, India +1.07%. Japanese stocks closed lower as bank stocks declined after the government said public pressure may force lenders to forgive loans to Tokyo Electric Power Co., the operator of the crippled nuclear power plant. The yen strengthened and undercut exporters when Japanese Economy and Fiscal Policy Minister Yosano said the yen's strength was the result of the dollar weakening, not the yen gaining independently. Chinese stocks closed higher, led by gains in bank stocks, after Goldman Sachs said the increase in China's reserve requirements will have a limited effect on net interest margins.

Monday, May 16, 2011...

Overnight Developments

•   Global stocks are lower with the European Euro Stoxx 50 down -0.60% and June S&Ps down -6.00 points. The dollar index rose to a 1-1/4 month high and most commodities fell as Greece prepares to ask for an increased bailout. Greece's ASE Stock Index tumbled to a 13-year low before European leaders and the IMF meet later today in Brussels as Germany demands deeper budget cuts in exchange for granting Greece extra aid or giving it more time to pay back loans. Also clouding the bailout talks in Brussels will be the absence of IMF Director Strauss-Kahn who was arrested over the weekend in New York on sexual-assault charges. Apr Euro-Zone CPI rose an as-expected +0.6% m/m and +2.8% y/y, with the +2.8% y/y increase the biggest annual gain in 2-1/2 years. Treasuries rose after Atlanta Fed President Lockhart said it's too early to consider an exit from record stimulus until the recovery becomes "more clearly sustainable."



•   The Asian stock markets today closed lower with Japan down -0.94%, Hong Kong -1.36%, China -0.88%, Taiwan -1.05%, Australia -1.30%, Singapore -0.86%, South Korea -0.85%, India -1.01%. Japanese stocks closed lower after Goldman Sachs cut Japan's equities to "underweight" due to "greater cautiousness" on US growth and domestic risks such as electricity supply and yen strength. South Korean stock prices were undercut after Goldman Sachs downgraded Korean equities to "market weight," citing slowing global growth and "persistent" local inflation, however, Goldman did keep its recommendation for Chinese and Taiwanese equities at "overweight."

Tuesday, May 17, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 down -0.06% and June S&Ps up +2.90 points. The euro is higher and credit-default swaps to insure European government debt fell to a 5-week low after Jean-Claude Juncker, the leader of the EU finance ministers, said the first tranche of Portugal's aid package is due by the end of May and a treaty on the European Stability Mechanism will be signed in June. Juncker also said that the EU would consider "reprofiling" Greek bond maturities as part of a package that includes stepped-up sales of state assets and deeper spending cuts. Hawkish comments from ECB Executive Board member Tumpel-Gugerell also supported the euro when she said interest rates should be consistent with economic activity, which suggests she sees room for further monetary tightening. European stocks were undercut after the May German ZEW economic sentiment fell -4.5 to 3.1, weaker-than-expected to its lowest level in 6 months. The British pound rose against the dollar as UK inflation accelerated more than expected and forced BOE Governor King to explain publicly why officials haven't raised interest rates yet. Apr UK CPI climbed +4.5% y/y, stronger than expectations of +4.1% y/y and the fastest pace of increase in 2-1/2 years, while Apr CPI core prices quickened to 3.7% y/y, higher than expectations of +3.2% y/y and the fastest pace since records began in 1997.



•   The Asian stock markets today closed mixed with Japan up +0.09%, Hong Kong -0.26%, China +0.50%, Taiwan -0.31%, Australia +0.73%, South Korea -0.03%, India -1.13%. The Japanese yen fell to a 2-1/2 week low against the dollar and boosted Japanese exporters after BOJ Governor Shirakawa said the Japanese economy is in a "very severe" state, which fueled speculation that monetary policy may be eased further. Asian mining stocks rose as copper prices climbed and Chinese stocks gained as coal producers rose on speculation power shortages will boost coal demand. The China Electricity Council estimated that China may face a summer shortage of 30 gigawatts as supply lags behind demand growth and the Shanghai Securities News reported that limits on power usage in China caused by a shortage of electricity may reduce China's Q2 economic growth by 0.5 points.

Wednesday, May 18, 2011...

Overnight Developments

•   Global stocks are mostly higher with the European Euro Stoxx 50 up +0.26% and June S&Ps up +2.90 points. The dollar is lower and most commodities are higher, which has led to gains in stocks led by basic-resource companies. The British pound fell against the dollar after minutes from the BOE meeting earlier this month showed policy makers voted 6-3 to keep interest rates on hold as the majority warned that tightening policy now could dampen consumer spending. The pound was also undercut after Apr UK unemployment claims unexpectedly rose +12,400 to 1.47 million, the fastest pace since Jan 2010. Mar Euro-Zone construction output fell for a second month as it slipped -0.3% m/m and -4.9% y/y. ECB officials ruled out ideas of a "soft" restructuring of Greek debt by European finance ministers after ECB Council member Bini Smaghi said there is no difference between a "hard" or "soft" restructuring and fellow ECB member Stark said that any restructuring would undermine the collateral Greek banks use to gain loans from the ECB and "this holds true for all kinds of restructuring." The ECB has bought 76 billion euros ($108 billion) of bonds of fiscally stressed countries in the past year and may suffer along with private investors in any restructuring and is also concerned that allowing Greece to renege on some of its obligations would create similar expectations for other indebted Euro-Zone nations.



•   The Asian stock markets today closed mostly higher with Japan up +0.99%, Hong Kong +0.48%, China +0.75%, Taiwan +0.68%, Australia +0.21%, Singapore +0.15%, South Korea +1.66%, India -0.28%. Asian stocks were boosted on improved company earnings results and increased M&A activity. Austar United jumped 6.1% on speculation Foxtel is in advanced talks over a potential takeover and Mizhuo Financial gained 3.2% after the Nikkei newspaper reported it plans to merge its retail and corporate banks. Australian bank stocks declined after Moody's Investors Service downgraded the long-term, senior unsecured debt ratings of the country's four major banks on concern their reliance on wholesale debt markets makes them vulnerable to swings in investor confidence.

Thursday, May 19, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 up +0.97% and June S&Ps up +4.50 points. The dollar and Treasuries are weaker while the British pound rallied when UK retail sales rose more than expected. Apr UK retail sales with auto fuel rose +1.1% m/m and +2.8% y/y, stronger than expectations of +0.8% m/m and +2.5% y/y as warm weather and the extra bank holiday for the royal wedding boosted consumer spending. The euro strengthened against the dollar after Goldman Sachs cut its 3-month dollar forecast to $1.45 per euro from $1.40, saying "With unemployment still high, fiscal consolidation looming and continued weakness in the real estate sector, the growth outlook remains less compelling in the US than in may other regions or countries." Stock prices received a boost after Citigroup revised up its global per-share earnings forecast for this year to +18% from a Sep forecast of +12%, citing stronger revenue growth and sustained margins. Incr eased M&A activity also lifted US and European stocks as Takeda Pharmaceutical agreed to buy Nycomed for 9.6 billion euros ($13.7 billion) and Toshiba offered $2.3 billion for Switzerland's Landis+Gyr AG.



•   The Asian stock markets today closed mixed with Japan down -0.43%, Hong Kong +0.66%, China -0.60%, Taiwan -0.58%, Australia +1.34%, Singapore +1.00%, South Korea -1.88%, India +0.31%. Japanese stocks closed lower after the economy shrank more than expected in Q1 as the Mar 11 earthquake and tsunami disrupted production and prompted consumers to cut back spending. Q1 Japan GDP was revised down to a contraction of -0.9% q/q and -3.7% annualized from the originally reported -0.5% q/q and -2.0% annualized, which sent Japan into its third recession within the last decade. The yen weakened to a 3-week low against the dollar on speculation the BOJ and the government will continue to provide record stimulus measures to Japan's economy. China's Shanghai Stock Index closed lower, led by declines in property developers and power producers, on concern the PBOC will boost borrowing costs and higher coal prices will hurt power producers' corporate earnings. China's National Busin ess Daily reported that inflation may exceed 6% in June or July due to a lower comparison base last year.

Friday, May 20, 2011...

Overnight Developments

•   Global stocks are mixed with the European Euro Stoxx 50 up +0.09% and June S&Ps down -4.00 points. Treasuries are higher after Chicago Fed President Evans said late yesterday that "slow progress" in the economy justifies stimulus measures, while gold and the dollar strengthened on speculation Greece will have to reorganize its debt. The yield on the 10-year Greek bond jumped 52 bp to a record 16.51%, which widened the difference with German bunds to a record 1,344 bp. Increased M&A activity is boosting European equities as Micro Focus International Plc rose 5.7% after the FT reported Advent International approached the company about a takeover, while Barnes & Noble surged 25% after it received a takeover offer from Liberty Media Corp. The euro weakened against the dollar after the Bundesbank said in its monthly bulletin that "growth is likely to ease somewhat in the foreseeable future." The decline in the euro was limited however, after Apr German producer prices rose a more-than-expected +1.0% m/m and +6.4% y/y, which will keep the pressure on the ECB for further interest rate hikes.



•   The Asian stock markets today closed mixed with Japan down -0.14%, Hong Kong +0.16%, China +0.03%, Taiwan -0.63%, Australia -0.51%, Singapore -0.13%, South Korea +0.77%, India +1.02%. At the conclusion of its 2-day meeting, the BOJ kept its benchmark interest rate unchanged at 0.00% to 0.10%, as-expected, and refrained from increasing its credit programs or asset purchases. Chinese stocks closed little changed after PBOC Governor Xiaochuan said that inflation remains "high" and China needs to strike a balance between economic growth and consumer prices, which fueled speculation the central bank will implement additional tightening measures. Concern the US economic recovery is losing momentum also pressured Asian stocks after Apr US existing home sales and the May Philadelphia Fed manufacturing index unexpectedly declined.

Tuesday, May 24, 2011...

Overnight Developments

•   Global stocks are mostly higher with the European Euro Stoxx 50 up +0.18% and June S&Ps up +3.20 points. The dollar and Treasuries are lower and commodities rallied after Goldman Sachs said it's turning "more bullish" on raw materials. European sovereign-debt fears eased after the Greek government endorsed an asset-sale plan and 6 billion euros ($8.4 billion) of budget cuts to win extra aid. The euro rose against the dollar after the May German IFO business climate index remained unchanged at 114.2, stronger than expectations of -0.5 to 113.7. Limiting European stock gains was the larger than expected drop in May French business confidence which fell -2 to 107, greater than expectations of -1 to 109, along with the larger-than-expected decline in Mar Euro-Zone industrial new orders which fell -1.8% m/m, greater than expectations of -1.1% m/m.



•   The Asian stock markets today closed mostly higher with Japan up +0.17%, Hong Kong +0.09%, China +0.11%, Taiwan +0.10%, Australia -0.31%, Singapore +0.08%, South Korea +0.22%, India +0.10%. Chinese stocks were undercut after Goldman Sachs lowered its 2011 China GDP estimate to 9.4% annualized, lower than a previous call of 10.0% annualized. Goldman also raised its forecast for Chinese inflation this year to 4.7% from 4.3%. Japanese stocks closed higher, led by gains in technology stocks, after Sony finished up 2.7% when it said it expects to turn a profit in fiscal 2011. Asian shipping companies were stronger after the Baltic Dry Index, a measure of shipping costs for commodities, rose for a third day.