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 Good morning! Here's what you need to know. - Markets in Asia closed mostly higher. Japan's Nikkei climbed 1.54%. Korea's Kospi was up 0.49%. Chinese markets fell. European markets were up, led by Germany's DAX at 0.82%. U.S. futures were pointing higher. Gold prices are flirting with $1,200.oz.
- Western powers signed a deal with Iran to curb its nuclear enrichment activity. In exchange for reducing and diluting stockpiles of highly enriched uranium and beefing up international monitoring of enrichment facilities, the U.S. and E.U. agreed to lift certain sanctions that the White House claimed had cost Iran $80 billion. London-traded Brent crude oil contracts fell as much as 2.5% on the news, and is now down 1.89% to $108.95. WTI contracts fell nearly 1.5% to $93.41.
- The National Association of Realtors releases pending home sales data for October prints at 10 am. Consensus is for a gain of 1.1% against a prior decline of 5.6%. That was the first major drop-off in a couple years, and things look to get back on track this month.
- At 10:30 am we get the Dallas Fed's Manufacturing Survey. Consensus is for a MOM gain of 1.4 to a reading of 5. We got mixed readings from Fed manufacturing surveys last week, with Kansas City's survey beating expectations by a point, while Philadelphia's unexpectedly plummeted.
- Japanese consumer data continues to disappoint, as restaurant sales declined 1.6% YOY in October, the FT reports, the first decline in six months. This cuts against the country's rising GDP and business confidence. Two weeks ago, Japan's consumer confidence index hit its lowest mark since Japanese Prime Minister Shinzo Abe took power in December. Energy costs are also rising. "Japanese citizens are becoming increasingly less optimistic about the economic revival," the FT says.
- More signs of deflation in continental Europe as Spanish producer prices fell 0.6% MOM and 0.2% YOY. "The European Central Bank's surprise rate cut earlier this month followed an equally-surprising fall in eurozone-wide price data," the FT says. "Investors have been assessing the risk of deflation in the currency area ever since, as the ECB struggles to promote the region's stuttering economic recovery."
- Meanwhile, the UK housing market remains on solid ground. At 42,808, new mortgage borrowing is now almost a third higher than a year ago, the FT reports. However, the figure declined MOM, and there was a net YOY contracting in overall borrowing.
- The Dow is within a bit more than 1% of a new inflation-adjusted high, the Wall Street Journal's E.S. Browning reports. Upon hitting 16219.52, the Dow will be at a level not seen since January 14 2000. "Since then, the Dow is up 37% but the consumer-price index is up 38%, which means all the headline-grabbing records don’t mean quite so much."
- U.S. banks are again threatening to begin charging customers for deposit accounts if the Fed follows through on a proposal to cut the interest rate on the 0.25% rate currently placed on the $2.4 trillion it holds in reserves, the FT reports. “Right now you can at least break even from a revenue perspective,” the paper quotes one executive, who added a rate cut by the Fed “would turn it into negative revenue – banks would be disincentivised to take deposits and potentially charge for them."
- Yields on U.S. bonds are now more unstable than European ones, mostly as a result of uncertainty over the Fed's tapering timetable, the FT's Ralph Atkins says. "Back in mid-2011, Italian and Spanish bond markets became the centre of world concern, with changes in total returns – taking account of price changes and interest payments – varying wildly, especially compared with US Treasuries. Since the middle of October, however, as the US Federal Reserve has moved closer to scaling back, or “tapering”, its emergency asset purchase programme, US seven to 10-year bonds have seen larger average fluctuations."
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