Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are talking about before markets open on Tuesday.
Good Morning! The China Stimulus drumbeats that sparked a late day rally in US equities yesterday has continued to get louder – The E-Minis have rallied 50bp from overnight lows to rest near unchanged right now, while we are looking at a mixed picture in Europe. Despite Germany’s GfK Sentiment coming in better, the DAX is off 40bp as DB headlines weigh on the Fins. London is outperforming on the back of miners and oil stocks, gaining 60bp. Spain’s IBEX bounced from Monday’s near 3M lows — while across Europe Luxury names underperformed on Swiss watch export #s. Holiday Volumes across the continent, with most markets trading 25% light. London’s turnover is almost 35% light to 20day trends. Over in Asia, Shanghai Composite index rose 30bp and Hong Kong’s Hang Seng added 20bp, while Ore has risen for a 3rd session, helping Aussie eek out a 20bp gain. Tokyo lost 20bp as Toshiba continues to hemorrhage — losing another 7% overnight in no volume: Japanese markets are closed tomorrow for the emperor’s birthday. Emerging markets looking quiet this AM.
The US 10YY is back above 2.2% as heavy selling in German Bunds and stabilisation for commodities has some selling in the complex. The Fins may still have headwinds, as the curve continues to flatten — but a big focus on Housing data (and 3Q GDP) this AM. The DXY continues to retreat, with Euro moving higher towards another 200dma test as shorts unwind — and Commodity currencies bounce on China stimulus chatter. With the DXY weaker, we should have a bid under Gold — but all metals are selling off small, led by a 1% drop in Copper. The Oil complex benefits from the WTI contract rollover into February, but let’s see what direction inventory data guesstimates go today ahead of API at 4:30. We get the US GDP (Third Estimate) and Core PCE at 8:30 today — followed by FHFA House Price Index at 9 and Existing Home Sales for November at 10, along with the Richmond Fed Business Activity Survey. NKE reports after the close, and we get that API data for Crude later tonight — “expected to show nationwide counter-seasonal stockpiles build for 2nd wk” notes Bloomberg. Street looking for a build of 1M overall, and 1.1M in Cushing.