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Traders.
Good Morning! December Seasonality helping equities, as the S&P finds itself marked 40bp higher to start this Tuesday. Expectations of more stimulus from the European Central Bank had propelled EU equities higher early, but the DAX finds itself just under water on a sharp retreat in the materials sector. Euro Stoxx are mixed, torn between higher Tech and Fins, but Energy and Industrials weigh. In London, the FTSE is climbing 60bp as those Fins leap after positive stress-test results, but the Mining complex continues to lag. Over in Asia, Data from China's manufacturing sector disappointed, causing doves to bid up Shanghai 1% off lows with China property outperforming on news of price increases for 4th straight month, helping Hong Kong climb 1.8%. The Nikkei ended up 1.3%, closing above 20,000 for the first time since August, KOSPI rebounded 1.6% from yesterday's smackdown, and Aussie jumped nearly 2% on the back of heavy covering in the Miners as the RBA left rates unchanged. Emerging Markets all managed a solid close into the Green across Asia as India stays unchanged, as expected.
The US 10YY is adding 3bp and nearing a challenge of yesterday's peaks as November Pension rebalancing abates, while those Fed Funds are moving slightly dovish, "only" projecting a 74% chance of liftoff in 2 weeks. That "Policy Sensitive" 2YY continues to climb however, breaking towards its highest close since 2010. The DXY is retreating from a 8month peak with the Euro popping upside 1.06 as EU Manufacturing improved and Eurozone unemployment pushes to 3-year low - while that $/Y whipped around on reports that the GPIF was hedging currency. With the lower $, we have tailwinds for Commodities, and the Metals complex continues yesterday's rally - led by a 1.2%+ pop in Copper and Platinum. The Oil complex is holding a tentative bid into Inventory data later today, while Gasoline is jumping 3%+ as traders dissect yesterday's renewable fuels headlines which should buoy the complex.
We get Light vehicle sales for November throughout the session, and expect headlines about Puerto Rico's $355mln payment due today. At 8:30 we get Canadian GDP, followed by Markit US Manufacturing PMI at 9:45. 10am brings us ISM Manufacturing and Construction Spending, and at 12:45 Fed's Evans (2015 Voter) Speaks on the Economy and Policy. At 4:30 tonight we get the API data for Crude, and at 6pm Fed's Brainard (voter) Speaks. Down in Washington, the Senate meets at 10am; may begin consideration of budget reconciliation legislation to repeal key parts of Obamacare, and the Senate Natural Resources Cmte holds hearing on Well Control Rule, other regulations affecting offshore oil and gas. At 4pm, Zhu Guangyao, China's vice finance minister, speaks at Peterson Institute for International Economics on China, global economy.