Overnight Developments

Dec E-mini S&Ps this morning are up +0.20% and European stocks are up +0.12% at a 2-week high as global markets rally on watered-down U.S. tariffs on China. Markets initially declined late yesterday when President Trump announced a 10% tariff on more than 5,000 products from China starting next week, but world equity markets recovered and moved higher after President Trump said the 10% tariffs will not increase to 25% until January 1. 2019. China's Ministry of Commerce said it would respond with levies on $60 billion worth of U.S. goods and President Trump said the U.S. will immediately pursue additional tariffs on $267 billion of Chinese imports if China does retaliate. Technology stocks moved higher after the U.S. list of Chinese-made products to be hit with new tariffs showed some Apple products were spared from tariffs. A rally in miners led European stocks higher after Dec COMEX copper rose +1.72% on signs of tighter global supplies as LME copper inventories fell -7,885 MT to a 7-3/4 month low. Asian stocks settled mixed: Japan +1.41%, Hong Kong +0.56%, China +1.82%, Taiwan -0.53%, Australia -0.38%, Singapore -0.07%, South Korea +0.29%, India -0.73%. China's Shanghai Composite recovered from a 2-1/2 year low and climbed to a 1-week high on speculation the Chinese government will take steps to offset the negative effects of U.S. tariffs. Japan's Nikkei Stock Index climbed to a 7-1/2 month high as exporter stocks rallied after USD/JPY jumped to a 1-3/4 month high, which boosts the earnings prospects of exporters with the weaker yen.

The dollar index is up +0.06%. EUR/USD is up +0.03%. USD/JPY is up +0.24% at a 1-3/4 month high.

Dec 10-year T-note prices are down -0.5 of a tick.

The ECB said in a report that the Eurozone banking system is unlikely to restore pre-crisis levels of return on equity "due to changes in the environment, risk profile and capitalization."

Speaking at an event in Paris, ECB President Draghi said Eurozone banks need to speed up disposal of their bad loans and shrink their hard-to-value investments if they want to feel comfortable enough to merge.