Bloomberg Business
-Commodities: Oil is gaining after yesterday’s drop below $35, with WTI for January delivery at $37.06 a barrel on the New York Mercantile Exchange at 10:30 a.m. London time. In the wider commodity market, Sam Walsh, chief executive officer of Rio Tinto Group warned that the collapse in iron ore prices has some producers «hanging on by their fingernails,” in an interview with Bloomberg television.
-Junk rout just junk: Regulators from the U.S. Securities and Exchange Commission are poring over Third Avenue Management’s books following the recent closure of its $788 million credit mutual fund, and checking up on high-yield mutual funds with similar holdings. Such funds are seeking to distance themselves from the events of last week, saying their investments are more diversified and easier to sell. Warnings of a high-yield bust have been plentiful, and now that lots of people wants their money back at once, the predictable liquidity squeeze is underway. For the moment, at least, worries that the junk bond rout will spread to the wider market seem contained.
-U.K. inflation: Inflation in the U.K. rose above zero for the first time in four months in November, rising 0.1 percent, the Office for National Statistics said this morning. With inflation still far below target, futures show that rate traders do not expect the Bank of England to follow the Fed in rising rates, with the first hike now not seen until 2017. U.S. CPI will be coming out later in the day, with economists expecting a 2.0 percent year-over-year gain in the core reading. Meanwhile, the betting firm Ladbrokes Plc, meanwhile, has raised the odds of the U.K. leaving the E.U. to a record high 40 percent.
-German investor confidence: German investor confidence improved for a second consecutive month with the ZEW index of investor and analyst expectations rising to 16.1 in December from 10.4 in November. Volkswagen AG, still suffering the after effects of the emissions scandal, managed to grow its European sales, but was not able to maintain its market share. The DAX Index was 2.1 percent higher at 11:10 a.m. London time, recovering some of yesterday’s losses.
CNN Money
-Hike, rattle and roll: The Federal Reserve is widely expected to hike rates Wednesday for the first time in nearly a decade. The Fed slashed interest rates to just above zero in December 2008 to stimulate the economy and boost the housing market during the Great Recession. A rate hike «will be a testament…to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession,» Fed Chair Janet Yellen said in a recent speech. But an interest rate rise is never a 100% sure thing. «The Fed does have the ability to surprise the market and one should never rule out … [the] possibility that they can leave the interest rate unchanged,» said Naeem Aslam, chief market analyst at Ava Capital Markets.
-Stock market overview: U.S. stock futures are rising ahead of the open and nearly all European markets are jumping by about 1% to 2% in early trading. Shares in European automakers like BMW (BAMXY), Daimler (DDAIY) and Fiat Chrysler (FCAM) are rallying by about 3% after official data shows car sales across the European Union surged by nearly 14% in November compared to the previous year. This marks the 27th consecutive month of sales growth. Asian markets ended the day with mixed results. Looking back to Monday, the Dow Jones industrial average added 0.6%, the S&P 500 rose 0.5% and the Nasdaq dipped by 0.4%.
-Oil prices stabilize: Crude oil futures are steady Tuesday and trading around $36.50 per barrel. Prices slid to $34.53 a barrel on Monday — the lowest level since February 2009. The drop was fueled by concerns about a surge in Iranian oil production as the world tries to cope with oversupply in the market.
-Economics: The U.S. federal government will update its inflation data for November at 8:30 a.m. ET. Inflation data in October was in line with expectations, showing prices increased about 0.2%. Over in Australia, the government lowered its 2015-2016 economic growth forecast, down to 2.5% from 2.75%. It also forecast higher debt and deficits. In a statement, treasurer Scott Morrison blamed the deteriorating budget on falling commodity prices and weaker global growth, among other things.