Dec E-mini S&Ps (ESZ16 +0.12%) are down -0.02% and European stocks are little changed, up +0.13%, as weakness in energy producing stocks drags the overall market lower with Dec WTI crude oil (CLZ16 -1.36%) down -1.27% at a 1-3/4 month low. Stock prices had moved higher in overnight trade, led by a rally in steelmaking companies, on President-elect Trump’s promise to boost infrastructure spending. Weakness in global bond markets is undercutting stock prices as well as the 10-year T-note yield jumped to a 10-1/4 month high of 2.30% and the 10-year German bund yield rose to a 9-1/4 month high of 0.396%. Asian stocks settled mixed: Japan +1.71%, Hong Kong -1.37%, China +0.45%, Taiwan -0.19%, Australia -0.47%, Singapore -0.97%, South Korea -0.79%, India closed for holiday. China’s Shanghai Composite rose to a 10-month high on optimism over President-elect Trump’s trade policies after Chinese President Xi Jinping he spoke with Trump for the first time following the election and said cooperation was the only correct choice for ties between the world’s two largest economies. Japan’s Nikkei Stock Index rallied to a 9-1/4 month high after Japan Q3 GDP grew at a faster pace than expected and as exporters gained after USD/JPY rallied to a 5-1/4 month high, which bolsters earnings prospects of exporters.

The dollar index (DXY00 +0.70%) is up +0.61% at an 11-1/4 month high on speculation a Trump administration will boost economic growth and inflation. EUR/USD (^EURUSD) is down -0.77% at a 10-1/4 month low on speculation the ECB may boost stimulus measures after ECB Vice President Constancio said that the +0.8% y/y increase in Eurozone Oct core CPI is “a cause of concern. USD/JPY (^USDJPY) is up +1.06% at a 5-1/4 month high.

Dec 10-year T-note prices (ZNZ16 -0.55%) are down -28.5 ticks at a 10-1/4 month nearest-futures low on an increase in inflation expectations as the 10-year T-note breakeven inflation rate climbed to a new 1-1/3 year high.

ECB Vice President Constancio said that the +0.8% y/y increase in Eurozone Oct CPI excluding food and energy is “a cause of concern since core inflation, depending on domestic factors, is not recovering.” That “may affect the dynamics of headline inflation going forward, affecting our monetary policy.”

Japan Q3 GDP grew at a 2.2% (q/q annualized) pace, stronger than expectations of +0.8% (q/q annualized) and the fastest pace of growth since Q1 of 2015. The Q3 deflator unexpectedly fell -0.1% y/y, weaker than expectations of +0.2% y/y and the biggest decline in 2-3/4 years.

China Oct industrial production rose +6.1% y/y, weaker than expectations of +6.2% y/y.

Key U.S. news today includes: (1) Dallas Fed President Robert Kaplan (non-voter) speaks at an event in Wichita Falls, TX followed by an audience Q&A, (2) Richmond Fed President Jeffrey Lacker takes part in a panel discussion at Washington College, (3) San Francisco Fed President John Williams speaks on a Pacific Business and Investment Briefing panel, (4) USDA weekly grain export inspections, (5) USDA Weekly Crop Progress.

Notable Russell 1000 earnings reports today include: TransDigm Group (consensus $ 3.20), Advance Auto Parts (1.72), AECOM (0.70), Communications Sales & Leasing (0.63).

U.S. IPO’s scheduled to price today: none.

Equity conferences this week include: Mizuho Global Investor Conference on Mon, Lithium Supply Chain & Energy Storage Conference on Mon, UBS Global Technology Conference on Mon-Wed, Morgan Stanley Global Chemicals and Agriculture Conference on Mon-Tue, J.P. Morgan Ultimate Services Investor Conference on Tue, NAREIT REIT World Conference on Tue, Bank of America Merrill Lynch Banking & Financial Services Conference on Tue-Wed, Stifel, Nicolaus & Co Health Care Conference on Tue-Wed, Morgan Stanley Global Consumer & Retail Conference on Tue-Thu, Barclays Select Series Conference on Wed, Goldman Sachs Metals and Mining Conference on Wed, William Blair Financial Technology and Services Summit on Wed, Bank of America Merrill Lynch Global Energy Conference on Wed-Thu, Jefferies London Health Care Conference on Wed-Thu, Canaccord Genuity Medical Technology and Diagnostics Forum on Thu, Vertical Research Partners Global Materials Conference on Thu, UBS Industrials and Transportation Conference on Thum, Morgan Stanley European Technology, Media & Telecom Conference on Fri.

CME Group (CME -2.28%) was downgraded to ‘Neutral’ from ‘Overweight’ at JPMorgan Chase with a 12-month target price of $ 116.

Lockheed Martin (LMT +0.74%) was upgraded to “Buy’ from ‘Hold’ at Stifel with a price target of $ 290.

Children’s Place (PLCE +3.70%) was upgraded to ‘Buy’ from ‘Underperform’ at Bank of America/Merrill Lynch with a price target of $ 92.

Aetna (AET -0.52%) was downgraded to ‘Market Perform’ from ‘Outperform’ at Bernstein.

Capital One Financial (COF +2.22%) was downgraded to ‘Hold’ from ‘Buy’ at Stifel.

Callaway Golf (ELY +1.68%) was downgraded to ‘Neutral’ from ‘Buy’ at Compass Point Research & Trading LLC with a 12-month target price of $ 11.50.

GrubHub (GRUB -4.82%) was upgraded to ‘Buy’ from ‘Hold’ by Stifel with a price target of $ 46.

iRobot (IRBT +2.26%) was downgraded to ‘Hold’ from ‘Buy’ at Needham & Co.

Mentor Graphics (MENT +1.79%) surged 21% in pre-market trading after Siemens AG agreed to buy the company for $ 4.5 billion.

U.S. Steel (X +4.26%) and AK Steel Holding Corp. (AKS +2.74%) are both up 3% in pre-market trading an President-elect Trump’s promise to boost infrastructure spending.

EPR Properties (EPR +0.80%) was upgraded to ‘Outperform’ from ‘Market Perform’ at Kansas City Capital Associates.

Digi International (DGII +5.43%) surged 20% in after-hours trading after Belden submitted an all-cash bid to buy the company for $ 380 million.

Atwood Oceanics (ATW +2.01%) slid 6% in after-hours trading after it reported Q4 revenue of $ 188.7 million, weaker than consensus of $ 194.1 million.

Dec E-mini S&Ps (ESZ16 +0.12%) this morning are down -0.50 of apoint (-0.02%). Friday’s closes: S&P 500 -0.14%, Dow Jones +0.21%, Nasdaq +0.10%. The S&P 500 on Friday closed lower on the surge in the 10-year T-note breakeven inflation rate to a 1-1/3 year high, which bolsters the case for a Fed interest rate increase at next month’s FOMC meeting and spurred long liquidation in stocks. There was also a slide in energy producer stocks after the price of crude oil tumbled -2.80% to a 1-3/4 month low. Stocks rebounded from their worst levels after the U.S. Nov University of Michigan consumer sentiment index rose +4.4 to 91.6, stronger than expectations of +0.7 to 87.9 and the highest in 5-months.

Dec 10-year T-notes (ZNZ16 -0.55%) this morning are down -28.5 ticks at a 10-1/4 month nearest-futures low. Friday’s closes: TYZ6 -12.50, FVZ6 -8.75. Dec 10-year T-notes on Friday sold off to a 10-month nearest-futures low and closed lower on comments from Fed Vice Chair Fischer who said “the Fed appears reasonably close to achieving both the inflation and employment components of its mandate,” which bolsters the case for a Fed rate hike next month. T-notes were also undercut by the stronger-than-expected increase in the U.S. Nov University of Michigan consumer sentiment index to a 5-month high and by the jump in inflation expectations after the 10-year T-note breakeven inflation rate rose to a 1-1/3 year high.

The dollar index (DXY00 +0.70%) this morning is up +0.607 (+0.61%) at an 11-1/4 month high. EUR/USD (^EURUSD) is down -0.0084 (-0.77%) at a 10-1/4 month low. USD/JPY (^USDJPY) is up +1.13 (+1.06%) at a 5-1/4 month high. Friday’s closes: Dollar index +0.275 (+0.28%), EUR/USD -0.0038 (-0.35%), USD/JPY -0.18 (-0.17%). The dollar index on Friday rallied to a 9-1/4 month high and closed higher on the jump in the 10-year T-note breakeven inflation expectations rate to a 1-1/3 year high, which bolsters the case for the Fed to raise interest rates. The dollar was also boosted by the slump in the Chinese yuan to a 6-year low against the dollar on concern over the Trump administration’s protectionist trade tendencies may undercut Chinese exports.

Dec crude oil prices (CLZ16 -1.36%) are down -55 cents (-1.27%) at a 1-3/4 month low and Dec gasoline (RBZ16 -0.79%) is down -0.0126 (-0.97%) at a 2-1/4 month low. Friday’s closes: Dec crude -1.25 (-2.80%), Dec gasoline -0.0400 (-3.99%). Dec crude oil and gasoline on Friday closed lower with Dec crude at a 1-3/4 month low and Dec gasoline at a 2-1/4 month low. Crude oil prices were undercut by the rally in the dollar index to a 9-1/4 month high and by doubts about whether OPEC will be able to agree on production cuts after Iran said it raised its Oct crude output by +210,000 bpd to 3.92 million bpd (the most since sanctions were lifted) and after news that Iraq crude production rose to 4.776 million bpd, +215,000 bpd more than OPEC’s own estimate.