Dave Lutz of JonesTrading has the top topics about which traders are talking today.
US Futures are near the highs of the overnight, gaining 50bp as they try to recover from last week’s slide as about $US1.2tn was wiped off the value of global stocks last week. Thanks to Month-End, Fed and ‘Good Harbor’ positioning, Smallcaps were hit for almost 3% on Thursday and Friday — I’ll be looking for a reversal, and IWM is slightly outperforming SPY early this AM. Good tailwinds from EU, with EuroStoxx up almost 75bp as Portugal moves to contain BES, propelling Banks by 1.5%. Asia mostly a strong overnight, led by a 1.7% jump in China as Banks ripped higher as the PBoC moves to lower financing costs — While India rebounded 1% from the post-budget selloff. Japan was weaker, as focus comes on the BOJ this week.
The US 10YY is flat, but all the PIIGS Yields are tighter this AM to Bunds on BES. That “Policy Sensitive” 2YY remains under pressure, despite losing 10bp late last week as hawks got quiet. The DXY is higher, as the Dollar gains some ground against EUR and Yen — causing a headwind for commodities. Focus remains on the Crude Complex, which is sliding red again led by demand concerns from Refinery outages (Coffeyville) and shutdowns on shrinking margins — Oil’s VIX leapt 17% last week. We are seeing some life in Grains, led by Wheat jumping 1.7% on EU quality concerns, while Gold continues to wander near 2M lows below the 200dma. Very Quiet Economic Day, we get ISM NY at 9:45, and a small POMO at 11. Macro Traders will be busy tonight though, with Rate decisions from Aussie and India, as well as PMIs from China and Japan ahead of the US print tomorrow.
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