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03Dec2015 Pre-Market Commentary: Markets Expected To Open Lower After ECB Cuts Rates, U.S. Dollar Takes A Nose Dive

Written by Gary

U.S. stock future indexes are fractionally lower after the ECB announces cut in deposit rate, jobless claims climb 9,000 to 269,000 which in turn investors saw the US dollar slashed to $98.27 down from 100.56.

Markets are expected to open lower with high volatility periods during today's session.

Here is the current market situation from CNN Money

European markets are broadly lower today with shares in Germany off the most. The DAX is down 1.79% while London's FTSE 100 is off 1.01% and France's CAC 40 is lower by 0.12%.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. jobless claims up, but trend consistent with labor market strength

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits rose last week, but remained at levels consistent with a strengthening labor market.

ECB cuts deposit rate as expected, to announce more measures

FRANKFURT (Reuters) - The European Central Bank cut its deposit rate on Thursday in its latest effort to revive lending and inflation in the euro zone and said it would announce further policy action later in the day.

Bill Gross urges investors to gradually de-risk portfolios

NEW YORK (Reuters) - Bill Gross, the closely watched bond investor, on Thursday said low interest rates are keeping alive "zombie corporations" that are unproductive and warned investors to de-risk portfolios into the new year.

Futures up day after Yellen's comments weigh on markets

(Reuters) - U.S. stock index futures were higher on Thursday, a day after Wall Street closed sharply lower following hawkish comments from Federal Reserve Chair Janet Yellen that hardened expectations of an interest rate hike this month.

Dollar General's quarterly sales miss estimates

(Reuters) - Dollar General Corp , the No.2 U.S. discount retailer by store count, reported lower-than-expected quarterly net sales, saying the retail environment was similar to the preceding quarter when it said consumers were holding back on spending.

EU to investigate McDonald's tax deals with Luxembourg

BRUSSELS (Reuters) - EU antitrust regulators will investigate McDonald's tax deals with Luxembourg which enabled the U.S. fastfood chain to escape paying taxes on European franchise royalties from 2009, in a move which could lead to hefty back taxes for the company.

Fiat Chrysler shareholders approve de-merger of Ferrari from group

AMSTERDAM (Reuters) - Fiat Chrysler Automobiles (FCA) investors on Thursday approved the demerger of Ferrari from the group, paving the way for Italy's Agnelli family to become the luxury sportscar maker's biggest shareholder.

Alibaba unlikely to be interested in Yahoo's core business: WSJ

(Reuters) - Chinese e-commerce giant Alibaba Group Holding Ltd is unlikely to be interested in buying Yahoo Inc's core business, the Wall Street Journal reported.

Draghi Holds Water Pistol Press Party - Live Feed

Contrary to what you might have read over at FT, Mario Draghi met (but certainly did not exceed) market expectations for a depo cut, moving 10 bps further into NIRP-dom in a desperate attempt to get inflation moving in the "right" direction and get a leg up in the global currency wars. Unfortunately, the market was looking for more and so, the EUR surged after the announcement.

Now, the fireworks can begin as the market will be glued to the presser in hopes Draghi will make up for not going with a 20 bps cut by over-delivering on QE expansion/extension.

(live feed)

Gold Jumps, Bunds Slump, EUR Pumps After Draghi Disappointment

Over-promise and under-deliver appeears to have been the Draghi meme as the ECB chief's loss of control of market front-running has left traders rapidly reversing their buy-the-rumor positions. EURUSD is spiking higher, Bund yields - most focused at the short-end - are surging, DAX is dumping, and US equity and bond markets are being sold. USD weakness has sparked gold and crude strength. We are gonna need a lot more jawboning in the press conference to save this...

Oil loves the weaker USD, stocks and FX carry not happy, Treasuries dumped on Bund arb...

and PMs are bid on weaker USD...


Following Epic FT Snafu, ECB Cuts Deposit Rate By 10bps To -0.30% As Expected

In what may have been the most shocking ECB announcement in recent history, moments ago the ECB cut its deposits rate by 10 bps to -0.30%, just as expected.

From the ECB press release:

At today's meeting the Governing Council of the ECB decided that the interest rate on the deposit facility will be decreased by 10 basis points to -0.30%, with effect from 9 December 2015.

The interest rate on the main refinancing operations and the interest rate on the marginal lending facility will remain unchanged at 0.05% and 0.30% respectively.

Further monetary policy measures will be communicated by the President of the ECB at a press conference starting at 14:30 CET today.

But while the rate cut was not unexpected, and was very much in line with consensus, what shocked the markets is that precisely 9 minutes before the ECB's official announcement, the Financial Times, now owned by the Nikkei, reported that instead of a rate cut, the ECB had left its rate unchanged:

Policymakers on the governing council left the deposit rate, which applies to a portion of banks' reserves parked at central banks across the currency area, at minus 0.2 per cent.

Markets had priced in a cut of between 0.1 and 0.2 percentage points.

The main refinancing rate remained at 0.05 per cent.

The article can be seen below.

Frontrunning: December 3

Mario Draghi Is About to Become the World's Market Risk Manager (BBG)

Five Things to Ask Mario Draghi From Negative Rates to QE (BBG)

Leaving behind baby and bombs, couple sows panic in California (Reuters)

Couple's motive in California rampage a mystery for police, family (Reuters)

In Grim Ritual, Barack Obama Again Calls for Stricter Gun Control After Mass Shooting (WSJ)

Islamic State Defeat Impossible Without Ground Force, Kerry Says (BBG)

OPEC States Push for Output Cuts in Face of Saudi Opposition (BBG)

British bombers strike Islamic State oil fields in Syria (Reuters)

Brimstone Missiles Target Islamic State as U.K. Joins Syria War (BBG)

Turkey dismisses 'Soviet propaganda', says trying to secure Syria border (

Global Stocks Fall After ECB Cuts Deposit Rate

Global stocks fell Thursday after the European Central Bank announced a smaller-than-expected cut to its deposit rate and an expansion of its stimulus program.

OPEC Argues Over Oil Production Cuts

While OPEC members appear to agree that production cuts are necessary, there is no agreement on which countries should do the cutting.

Feds Win Fight Over Risky Loans

A controversial push by regulators extends their reach beyond individual banks and across the entire financial system.

November 2015 Job Cuts Fall to 14 Month Low. But Annual Cuts On Track to Reach 6 Year High.

from Challenger Gray and Christmas

After a four-month stretch that saw more than a quarter of a million job cuts announced by U.S.-based firms, planned layoffs in November fell to the lowest level in more than a year.

Early Headlines: Asia Stocks Decline, Oz GDP Strong, Massive China Muni Bond Program, UK Launches IS Airstrikes, EZ Inflation Near Zero, Massive El Nino And More

Written by Econintersect

Early Bird Headlines 03 December 2015

Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.


Currencies: Euro jumps to 2-week high after ECB cuts deposit rate

The euro fell to its lowest level in two weeks Thursday after the European Central Bank cut its deposit rate by 10 basis points to minus 0.3%.

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