Overnight and in to the open

Last night or earlier this morning, Chinese CPI reading came in lower than expected hitting a 29 month low of 2.2%, with a little dampening effect on sentiment. The Japanese government also lowered their forecasts for the economy in Japan broadly.

As was the case over the weekend, there wasn't much market moving news out of Europe overnight. The only notable news overnight was the Spanish region of Valencia said they may default if they don't receive government aid quickly; as a result, Spanish and Italian banks are trading down on average about 3% with Spanish 10 year yields above 7% given the comments from the region of Valencia.

Before US pre-market there was news that the EU granted Spain a 1 year extension to meet budget targets as well as lifting the targets from 5.3% by 2013 to 6.3% by 2014 as the Spanish economy has deteriorated badly in recent months.

Also before the US pre-market, there was a minor move higher in EUR/USD on a rumor reminiscent of last week,

EU SAYS NO SOVEREIGN GUARANTEE NEEDED FOR DIRECT ESM BANK FUNDS


I wouldn't read to much in to this, just the EU sewing circle at it again.





Dovish comments from the F_E_D's Evans about the need for more easing to combat unemployment gave a boost to fixed income and saw 10-year Treasuries trading higher.

Crude mentioned last night, which was seeing some momentum lost that momentum in to the European open.

Market trade has remained relatively thin and flat, the Eurogroup does meet today which is not expected to produce any major breakthroughs.

We do have Alcoa kicking off earnings season after the close.

Overall focus in Europe remains on yields in the periphery and the Eurogroup meeting to discuss Greece, Spain and banking supervision.


Other than that, most news out of Europe continues to focus on the widening Libor scandal.




Here's what the EUR/USD and ES looked like overnight to present.

 ES from Friday's close to Europe's 3 a.m. EDT open...

 And approximately from 9 p.m. Sunday to present, all in all pretty flat with about 3 points of downside from Friday's close to the 9:30 NY open.

The EUR/USD is relatively flat from Friday's FX market close (the new week's open at the green arrow).


I don't expect much movement from the Eurogroup meeting, however in a dull market like this rumors will be all the rage as they are picked up, ran with and promptly dumped as they are refuted-a common theme in a macro economic environment like this. AA may have some market moving implications as they kick off earnings, we'll take a look at AA today and see if there's anything of interest there before earnings after market.