REUTERS/Kai PfaffenbachGraffiti is seen at the fence surrounding the construction site of the new European Central Bank headquarters in Frankfurt, December 3, 2013.
Good morning. Here’s what you need to know.
- Asian markets were mixed in overnight trading. Japan’s Nikkei had a rough day, closing down 2.17%. Korea’s KOSPI was down 1.12%, while Shanghai gained 1.31%. European markets were also mixed, and U.S. futures were pointing higher.
- The Eurozone economy grew 0.1% quarter-over-quarter in Q3, in line with market forecasts. GDP fell 0.4% year-over-year, also in line with analyst expectations. Retail sales in the Eurozone fell to 0.1% year-over-year in October, and economists were looking for a 1.0% bump.
- China’s services industry held steady in November, with HSBC/Markit services PMI falling slightly to 52.5 from October’s 52.6 (a figure above 50 means growth). Elsewhere in the region, Australian GDP moved up 0.6% in the September quarter, below growth forecasts.
- The European Commission will fine a spate of the world’s largest banks — from JP Morgan to Deutsche Bank — $2.3 billion for interest-rate benchmark rigging, Reuters’ Foo Yun Chee reports. It will be the “highest antitrust penalty ever imposed by the Commission.”
- Today is another busy day of economic data. Private companies added 215,000 jobs in November, according to the ADP national employment report. Economists were expecting 170,000. ADP is known for being a bit flimsy, but the report still helps take the labour market’s temperature ahead of Friday’s big non-farm jobs report.
- The U.S. trade balance narrrowed to -$40.6 billion, slighly less than the -$40.0 consensus. “The trade deficit probably didn’t budge in October, despite a large jump in petroleum imports,” Citi’s Peter D’Antonio wrote clients ahead of the report. “Oil imports increased mainly due to a rise in volume, as prices actually fell. We think that the non-oil deficit improved mainly on the export side. While growth in the rest of the world has slowed, there is no reason to believe that the declines in each of the past three months represent a new trend.”
- At 10:00 a.m., ISM non-manufacturing will be released. Economists believe the services index dropped to 55.1 in November, down from October’s 55.4 print. The index has been “generally more positive” than actual economic growth would have you believe, Citi’s D’Antonio noted.
- The September and October new home sales stats will be published at the same time this morning (10:00 a.m.) thanks to the government shutdown. Economists are looking for sales to climb to an annualized pace of 430,000 units in October. “The Federal government shutdown may have had an effect, as 17% of realtors said delays in IRS income verification weighed on sales in October,” UBS’ Kevin Cummins wrote clients. “Other indicators of housing demand were also softened in September and October, including mortgage applications and builder sentiment.”
- Finally at 2:00 p.m., the Fed will release its monthly Beige Book, the collection of economic anecdotes from regional banks. Market watchers will endeavour to read the tea leaves in the Fed’s tone for any indication that the central bank may taper its asset purchasing program before the end of 2013.
- Remember synthetic collateralized debt obligations — those complicated financial instruments in part blamed for igniting the financial crisis? Well, they’re back, according to the FT. But in order to appease investors’ post-crisis risk appetite, banks are asking for less collateral. “It’s very easy to call it a leveraged super senior but what it really is, is a vanilla super senior plus financing,” one bank executive told the FT. Great!