[FONT=verdana,arial]Market Comments[/FONT]
Dec E-mini S&Ps this morning are down -11.25 points (-0.80%) to a fresh 1-1/2 month low. The S&P 500 index on Thursday closed mildly higher: S&P 500 +0.30%, Dow Jones +0.20%, Nasdaq 100 +0.08%. Bullish factors included some short-covering after recent losses, a 1.0% q/q increase in UK GDP, and reports that the BOJ next week will boost its asset-purchase program. Yesterday's Sep durable goods orders report of +9.9% was stronger than expectations of +7.5%, but the capital goods component was weaker than expected. Sep non-defensive capital goods orders ex-aircraft were unchanged versus expectations of +0.8%, and Aug was revised lower to +0.2% from +1.1%. The Sep pending home sales report of +0.3% was weaker than market expectations of +2.5%. The weekly initial unemployment claims report was in line with market expectations.
Dec 10-year T-notes this morning are up +15 ticks on increased safe-haven demand with the slide in global equities. Dec 10-year T-note prices on Thursday closed lower: TYZ2 -15, FVZ2 -8.75. Bearish factors included the mildly higher close in stocks, technical selling with the new 2-month low, and the poor reception seen for the 7-year T-note auction, which saw a bid cover ratio of 2.56 that was the lowest in more than three years. Fitch said that it is leaving America's AAA credit rating unchanged with a negative outlook and that it would not change anything until at least late 2013 as it waits to gauge Washington's budget moves next year.
The dollar index this morning is up by +0.24% to a 2-week high with EUR/USD down -0.30% to a 2-week low and USD/JPY down -0.61%. USD/JPY had posted a 4-month high overnight on expectations of further BOJ stimulus measures at next week's policy meeting, although USD/JPY fell back after a drop in stock prices boosted safe-haven demand for the yen. The dollar index on Thursday closed slightly higher: Dollar index +0.17 (+0.21%), EUR/USD -0.0040(-0.31%), USD/JPY +0.49 (+0.61%). The dollar index closed slightly higher as T-note yields rose and supported the dollar's interest rate differentials. However, bearish factors for the dollar included the slightly higher close in stocks, the weaker-than-expected U.S. pending home sales report, and reports that troika officials have reached a draft agreement with Greece. However, the hard part now is for Greek Prime Minister Samaras to see if he can push the new austerity measures through the Greek parliament without fracturing his coalition.
Dec WTI crude oil prices this morning are down -45 cents a barrel and Dec gasoline is down -0.97 cents a gallon. Dec crude oil on Thursday closed higher: CLZ2 +0.32 (+0.37%), RBZ2 +0.0410 (+1.58%). Crude oil and gasoline prices saw some short-covering. Gasoline received a boost from forecasts that Hurricane Sandy could be the worst storm to hit the Northeastern U.S. in a century, which could disrupt refinery operations and disrupt oil and gasoline shipments into NY Harbor where Nymex gasoline futures are priced.
