Trade the News Market Internals Update at 12:00ET

Dow +61 S&P +5.7 NASDAQ +19.5

***Economic Data***

– (UK) Bank of England (BOE) left both Interest Rates and Asset Purchase Target unchanged at 0.50% and £200B respectively; as expected
– (CL) Chile Aug CPI M/M: 0.2% v 0.1%e; Y/Y: 3.2% v 3.1%e; CPI Ex Perishables & Fuel M/M: 0.2% v 0.2%e
– (SA) South Africa July Manufacturing Production M/M: -6.0% v -1.%e; Y/Y: -6.0%% v -0.5%e
– (EU) ECB leaves the Main 7-Day Refi rate unchanged at 1.50%; as expected
– (CA) Canada July Building Permits M/M: +6.3 v -1.5%e
– (CA) Canada July New Housing Price Index M/M: 0.1% v 0.3%e; Y/Y: 2.3% v 2.5%e
– (CA) Canada July Int’l Merchandise Trade: -C$ 0.75Bv -C$1.0Be
– (US) July Trade Balance: -$44.8B-$51.0Be
– (US) Initial Jobless Claims: 414K v 405Ke; Continuing Claims: 3.72M v 3.706Me
– (MX) Mexico Aug Consumer Prices M/M: 0.2% v 0.2%e; Y/Y: 3.4% v 3.5%e; CPI core M/M: 0.1% v 0.2%e
– (BR) Brazil Aug Vehicle Production: 325.3K v 307.2K prior; Vehicle Sales: 327.4K v 306.2K prior; Vehicle Exports: 44.9K v 46.5K prior
– (US) Weekly EIA Natural Gas Inventories: +64 bcf v +60 bcf to +65 bcf expected range

– US equities sold off in the pre-market this morning, following European equity indices lower. But stocks have rallied heading towards the European close. The ECB and BoE rate decisions were the main event, although there were no surprises in either announcement. The trade balance data indicated that US exports rebounded sharply in July, rising 3.6% to a new all-time high of $178 billion. Imports were softer than projected due to an unexpectedly large decline in petroleum products. The weekly initial claims data rose very slightly, likely due to the hurricane, while continuing claims keep falling. Spot gold has ticked higher after the declines of the last two session, gaining around $40/oz to trade around $1,850. Bund and Treasury markets saw early gains evaporate has stocks rebounded. The US 10-year yield remains just above 2% while the German Bund holds near 1.9%, but did touch fresh lifetime lows following commentary from Trichet’s press conference.

– Shares of Hovnanian gain ground in post-market trading and before the open this morning. The firm’s headline numbers were as bad as ever, however its contract backlog and net new home contracts both surged, while the contract cancellation rate continued to decline. HOV is flat on the day mid morning. Smithfield Foods gained ground ahead of earnings but fell sharply and shares of SFD are down about 4%. Building supplies firm Pall offered a preliminary view of its Q4, stating that earnings were lower than expected while revenue is above par. Shares of PLL are down 8%. In M&A news, Caliper Life Sciences is being acquired by PerkinElmer for $10.50/shr, a 42% premium to the prior close. The total deal is valued at $600M.

– The European rate decisions held no surprises, with both the BoE and ECB holding rates steady, as expected. Sterling rallied in the aftermath of the BoE decision as no fresh QE measures were announced. EUR/USD probed 8-week lows below the 1.3950 level after ECB staff projections lowered the euro zone growth outlook for 2011 and 2012. The euro weakened following comments that the ECB would ensure that liquidity for European banks was not constrained. The USD was also aided by a narrower Trade deficit number. One headwind for the greenback in the session was FX chatter that President Obama’s speech tonight would not mention any tax holiday for possible corporate cash repatriation.

***Looking Ahead***

– 11:00 (US) Treasury Refunding announcement for 3-year, 10-year and 30-year Bonds
– 11:00 (GE) German Chancellor Merkel holds speech at CDU Konrad-Adenauer-Stiftung, Berlin
– 11:00 (US) Weekly DOE Energy Inventories: Crude: -1Me; Gasoline: -2Me; Distillate: -1Me; Utilization: 86.9% w/w
– 11:30 (BR) Brazil Aug Commodity Price Index M/M: No est v -3.3% prior; Y/Y: No est v 16.0% prior
– 11:30 (BR) Brazil Central Bank Posts Currency Flows’ Data
– 13:00 (US) Fed Chairman Bernanke speaks to Economics Club in Minnesota
– 15:00 (US) July Consumer Credit: $6.0Be v $15.5B prior
– 19:00 (US) President Obama job’s speech
– 19:50 (JP) Japan Q2 Final GDP Q/Q: No est v -1.4% prelim; GDP Annualized: No est v -1.3% prior
– 22:00 (CH) China Aug Consumer Price Index Y/Y: 6.1%e v 6.5% prior
– 22:00 (CH) China Aug Producer Price Index Y/Y: 7.2%e v 7.5% prior

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