Equity futures are moving higher Friday ahead of key trade balance and consumer sentiment data. And interest rates are moving higher too.
S&P 500 futures are 4.50 points higher at 1,237.50 and Dow Futures are 32 points higher at 11,394. The S&P 500 has jumped 3.67% since Nov. 29.
The yield on the 10-year Treasury moved up three basis points overnight to 3.23%. The benchmark 10 year note is currently -5/32 at 94-27 yielding 3.235%. The Fannie Mae 4.5 MBS coupon is +2/32 at 102-16.
Light crude oil is trading up 0.31% at $88.67 per barrel, while gold prices are 0.09% lower at $1,386.16 per ounce.
News from China had mixed effects overnight. Markets responded positively to new growth data, as exports surged nearly 35% (versus forecasts of 23.6%) and imports narrowed to $22.9 billion. Consequently, the trade surplus fell to $22.9 billion (from $27.1 billion).
However, markets didn’t like the announcement that the People's Bank of China is raising the reserve requirement ratio again by 50 basis points to 19%, effective Dec. 20. Economists at BMO Capital Markets note that’s the third reserve hike in the past few months.
Key Events Today:
8:30 ― The Trade Balance is expected to show a monthly gap between exports and imports of $43.8 billion in October. September’s $44 billion gap marked a 5% decrease from the prior month as consumer goods and auto parts imports fell sharply. Estimates from economists polled by Thomson Reuters range from $39.5 billion to $46.50 billion.
“We expect import volumes to decline on sharply lower petroleum imports, and on a decline in consumer goods imports as pre-holiday inventory restocking comes to an end,” said economists at IHS Global Insight. “We also expect exports to bounce back after two soft months, with industrial supplies and capital goods leading the surge. Overall, we expect trade to be a strong plus for fourth-quarter growth, after being a big drag in the second and third quarters.”
10:00 ― Consumer Sentiment is expected to inch forward to 72.5 from 71.6 as the holiday shopping season gets underway. The Reuter's/University of Michigan survey moved up 2.3 points last month but remains pessimistic overall ― in July the index read 76.0. Signs of improvement weren’t bad though; the current economic conditions component rose to 82.1, its second highest level since April 2008.
“Consumers are feeling more optimistic due to gains in the stock market and an improving trend in the labor market, despite November's poor employment report,” said forecasters at IHS Global Insight. “But their optimism remains constrained by higher gas prices, a poor outlook on the housing front, and uncertainty over the extension of personal tax cuts and emergency unemployment insurance benefits.”
2:00 ― The Treasury’s Budget Statement is anticipated to show a monthly gap of $131 billion in November, compared with $120 billion in 2009 and the 5-year average November gap of $87.3 billion, according to Bloomberg. Estimates from forecasters polled by Thomson Reuters range from $110 billion to $140 billion.
“We expect that the budget balance was about unchanged from the prior year,” said economists from Nomura. “Although receipts have picked up, daily figures from the Treasury also suggest some growth in expenditures during the month.”
Other Events....
New York Fed announces the updated QEII Treasury purchasing schedule.