Dave Lutz, the head of Exchange Traded Funds at JonesTrading, has a quick overview of what traders are talking about on Friday.
- US stock futures are little changed after the S&P 500 closed three points from its all-time high on Thursday.
- Bonds are lower across the world, and are headed for their worst two-week performance in 26 years according to Bloomberg. The sell-off began after Donald Trump won the election last week, as traders bet on higher fiscal stimulus and inflation.
- The US dollar is adding to its nine-day streak, which is the longest in seven years. Traders have bet a near 100% chance that the Federal Reserve will raise rates in December, according to Fed fund futures.
Good Morning! US Futures are mixed, with Russell and Nasdaq up small, while Spoos are in the red — It’s a sea of red in Europe as Bonds slid around the world, adding to their biggest two-week loss in at least 26 years – Banks and insurance companies had led markets higher as 10YYs ripped to new peaks, but have reversed lower and those Miners remain under pressure. DAX is off 15bp, but losses worse in London, where the FTSE drops 50bp as Miners and “Yield Proxies” like Utilities get hit. Relatively quiet overnight in Asia, where Aussie climbed 40bp, China was hit for a like amount, while the Nikkei hit 10month highs as the Yen fell, with the 225 re-entering a bull market. Shippers and Car-Makers led gains. EM Asia was all mixed, and India continued it’s week losses by closing off small.
Overnight focus was on Japan, where the JGB 10YY hit 4bp, up 2bp on the day in a sharp challenge to the BOJ — The Selling in Bunds and Treasuries is reversing slightly tho, with the US 10YY retreating small after touching 2.34% in the overnight and Bunds surrendering the 30bp level on the 10YY. Dollar adding to its 9day winning streak, the longest in 7years as Fed Funds rest at 96% of a hike, while Euro continuing longest streak on record as Draghi talks up stimulus. $/Y busted thru ¥110 — all big headwinds for the commodity complex. Gold nearing 5month lows and a $1200/oz test, and Ore was down 1% weighing on Copper and other industrial metals. WTI is up small after yesterday’s weakness into Expiry on Monday. Natty Gas finally showing some life, climbing 1.5% early as it is damn cold in Annapolis this AM.
Relatively quiet day of headlines, with Fed’s George speaking in Houston at 9:30 — US Leading Index hits at 10, just before Kansas City Fed Manf. Activity at 11. At 1pm focus shifts to the Energy patch, with Baker Hughes Rig Count numbers released, and at 1:30 Fed’s Kaplan Speaks in Houston. At 3:30 we get the CFTC “Commitment of Traders” data to round out the week.