Dave Lutz of JonesTrading has the top topics about which traders are talking today:
US Futures are falling off slightly as equity momentum shifts to Europe where Germany is staging it’s first rally in 7 sessions. Solid earnings out of Europe and a rebound in banking shares has the DAX adding 60bp, but trading is very light, with most exchanges trading 60% of normal volume. Reports of Russia massing more troops on the border is weighing on sentiment, with the Micex off 1%, and rouble under pressure. It was a mostly weak session in Asia, as a Better PMI print in Japan hit the Nikkei for 1% into the BOJ later this week, while Shanghai retreated from a 8M high as HSBC Services PMI comes in the lightest in 8 years. Taiwan had its biggest hit in 6M as HTC reported slumping smartphone sales hitting big-tech, while Dovish guidance from India helped Sensex surge 80bp. Global flows showed a trend of selling Asian banks and rolling into EU/UK fins — while Miners are lagging on weak China #s. Keep an eye out for a reversal of that ETF allocation trade we saw yesterday from F-Squared ($30B+ Manager) — They were clearly selling Dividend sensitive ETFs — Specifically Utilities and the DVY — while they were rolling into Consumer Discretionary plays.
The 10YY in the US is basically flat, testing yesterday’s lows in the overnight, while that “Policy Sensitive” 2YY remains near 2week lows. We are keeping an eyeball on PIIGS debt, and the Greek upgrade last week was a “Sell the News” event with Greek Yields out another 17bp to Bunds today – Sterling is gaining on Strong UK services # into BoE decision, while the Aussie$ is losing ground despite the RBA leaving rates unchanged. The $US is making strong gains against the Yen, helping propel the DXY toward 10M peaks. Despite this headwind for commodities, Gold is trying to bounce after both the Yellow and Silver Metals broke downside 200dma yesterday, smacking the Junior Miners sharply. The Oil complex remains in focus after last week’s sharp liquidation, and more chatter of exports has a slight bid under WTI relative to Brent into storage numbers. Scheduled Catalysts are light today, we get market Services at 9:45, The official ISM services print at 10 — there is NO POMO at 11, and the calendar is quiet into API data tonight at 4:30
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