Dave Lutz, head of Exchange Traded Funds at JonesTrading, has a quick overview of what traders are talking about right now.
- The pound flash-crashed. The British currency fell 6% within two minutes in Asian trading amid growing fears of a “hard” exit by Britain from the European Union. And, the US dollar index, which measures it against a basket of other major currencies, rose towards a new high.
- US stock futures are slightly lower ahead of the jobs report at 8:30 a.m. ET. Treasury yields are little changed as well.
Good Morning! US Futures are off about 30bp, as markets digest whippy moves in FX overnight ahead of the US Jobs Report. The FTSE the only major market across the Atlantic to be in the green — as Exporters squeeze higher on the Pound “Flash crash” overnight. The DAX is off 50bp weighed heavy by Discretionary as Travel and Leisure stocks fall across the Continent. Banks continue to outperform on Credit Tailwinds, and like last weekend, DB Deal optimism is percolating, sending that stock up another 1%. In Asia, Aussie climbed 80bp as gains in Fins and energy stocks offset losses in gold miners — Nikkei lost 20bp in Quiet trade – Hong Kong lost 50bp — Activity was muted as China remained closed for “Golden Week” and Hong Kong / Japan on holiday Monday.
The 10YY is drifting near unchanged with headlines from the employment report and 4 Fed Speakers, all voters, kicking off in a hour. That “Policy Sensitive” 2YY remains on new 4month highs as the street jockeys closer to a 200k print. All the action has been in England, there the British Pound collapsed 6% – The move sparked by Hollande comments, then exasperated by option-stop levels in a very low liquidity timeframe — Sterling remains nearly 3% lower. Yields on 10-year U.K. gilts jumped to June highs as Carney joins May in the shift to Fiscal Stimulus. The DXY has tested fresh peaks thanks to Pound, Euro and Yuan (smashed on falling Chinese FX reserves) — but Gold trying to bounce from 3 1/2month lows and Crude drifting around unchanged.
Ahead of us today, at 8am we get the G20 Finance Ministers and Central Bank Governors press conference — Just before the US Employment report at 8:30, with immediate analysis on CNBC by Fed’s Mester (Hawk). At 10am we get Wholesale Inventories, then at 10:30 Fed VC Fischer Speaks in Washington. At 12:45 Fed’s Mester Speaks again, just before the 1pm release of the Baker Hughes Rig Count. At 3pm Fed’s George (Mega-Hawk) Speaks in Washington, right when US Consumer Credit is released. 3:30 brings the CFTC “Commitment of Traders” data, and at 4pm Fed’s Brainard (leans Dove) Speaks in Washington.