5 Things to Know Before the Market Opens

THE DAY AHEAD

December 22

*Stocks were mixed in Asian trade. Shanghai lost 0.9% and the Nikkei was off by a quarter percent, but the Hang Seng rose a quarter percent and Australia was up a fraction. European indexes are little changed for the most part; the Dax is currently flat, but the Footsie has a gain of about 0.4%. US stock futures are essentially unchanged as I write.

*The November reading of Japan’s Merchandise Trade Balance was a surplus of Y426.7 billion, down from the month before and Y200 billion less than forecast, as Imports grew 14.2% on a year over year basis and Exports were up 9.1% on that basis.

*The November reading of Germany’s Import Price Index was up 1.2% on the month, more than twice the expected increase.

*The most recent Bank of England vote to keep rates and stimulus steady was split three ways, 1 – 7 - 1, according to the minutes from their latest policy meeting. Posen wanted to add more stimulus, Sentence again wanted to hike rates a quarter point and the remaining policymakers were happy to leave things just as they were.

*The final Q3 reading of the UK GDP was revised down one tenth to +0.7% on a quarter on quarter basis, it had been expected to be unrevised.

*US mortgage applications were down 18.6% in the week ended December 17, according to the Mortgage Bankers Association. This was the biggest decline of 2010, driven by a 25% drop in Refis; applications for purchase were down 2.5%.

*The final reading of the Q3 GDP is due out at 7:30am CST. Headline growth is expected to be revised higher by three tenths to 2.8%, the estimate on Personal Consumption is one tenth higher at 2.9% and the GDP Price Deflator is forecast to be steady at 2.3%. The quarter on quarter annualized reading of the PCE Core inflation measure is expected to be unrevised at +0.8%. The November reading of Existing Home Sales is due out at 9:00am CST, it is expected to show a monthly increase of 7.1% for an annualized sales rate of 4.75 million units. Also due out at 9:00am is the FHFA House Price Index, it is expected to show a month on month decline of 0.2%.

*The weekly report on energy inventories is due out at 9:30am CST. Stocks of Crude Oil are forecast decline by 3.4 million barrels, Gasoline inventories are expected to increase 1.5 million and the estimate for Distillates is unchanged on the week.

*The Fed is scheduled to buy Treasuries today that are due to mature between 2/15/21 and 11/15/27; the results of the operation will be announced just after 10:00am CST.

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