Palm Beach, FL 11/9/11 (StreetBeat) --*Stocks were generally higher in Asian trade. The Hang Seng was among the best with a 1.7% gain, the Nikkei added one and a half percent, Australia was up 1.2% and Shanghai rose 0.9%. But European indexes are getting clobbered this morning with the Dax off by three percent and the Footsie down two percent; Italy is off by almost four percent. US stock futures are down a bit more than two percent as I write.*The October reading of China’s Consumer Price Index is 5.5% on year on year basis; right on the forecast and down six tenths from the annualized reading from the month before. The October Producer Price Index fell more than expected, down 1.5% on the month to 5.0%; the estimate was 5.8%. The October result for Retail Sales was right on the forecast at +17.0% year on year and so too did October Industrial Production hit the estimate, +14.1% annualized.
*The September reading of Japan’s Trade Balance was a bigger surplus than expected at Y373.2 billion, as exports rose smartly while imports were down from the month before.
*The ECB says that their second of three 3-month dollar tender facilities saw slack demand of $400 million.
*Greek PM Papandreou is set to offer his resignation today at 5pm Athens’ time or 9:00am CST. However, the negotiations to set up a new government have broken down, so at the moment there is no one to take his place. There are conflicting reports concerning rumored candidate Papademos; on the one hand it has been said he turned down the position but there is a recent comment from a Greek lawmaker that Papademos has not yet been approached about the job.
*Overnight LCH Clearnet increased the amount of collateral that needs to be posted as margin for Italian bonds. They have used a tiered approach to the margin increase, but bonds that are due to mature in 7 to 30 years have had their margin rate increased five percentage points, from 9% up to 14%. The Italian 10 Year yield has traded above 7.40% today, up more than sixty basis points from yesterday; it is about 7.33%. Berlusconi still intends to leave once the budget is passed, but the timing of that vote is not clear and neither is it clear what comes next in Rome.
*Ten Year yield spreads versus Germany are widening sharply this morning for Italy, up 66 basis points or so to 556 basis points, obviously a euro era record. But also wider is the 10 Year spread between France and Germany, also a euro era record at 146 basis points, seventeen wider on the day. The spread between Italy and the blended yields of France, Netherlands and Germany is out to 4.94% today; out more than fifty bps on the day and 140 basis points wider since October 31.
*US mortgage applications were up 10.3% in the week ended November 4, according to the Mortgage Bankers Association; both key components rose on the week.
*The September reading of Wholesale Inventories is due out at 9:00am CST, it is expected to be +0.5% on a month on month basis.
*Fed boss Bernanke is scheduled to speak at 8:30am CST at a conference on “Small Business and Entrepreneurship During an Economic Recovery”; not likely market moving. Also set to talk today is Governor Tarullo at 11:15am CST; the topic is financial regulation.
*The weekly report on energy inventories is due out at 9:30am CST. Stocks of Crude Oil are forecast to increase 500k barrels, Gasoline inventories are expected to rise 1.0 million and the estimate for Distillates is -2.2 million.
*The Fed is scheduled to sell TIPS today that are due to mature between 4/15/12 and 4/15/14; the results of the operation will be announced just after 10:00am CST.
*The Treasury plans to sell $24 billion 10 Year Notes today; the auction results will be announced just after noon CST.
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