Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are talking about before markets open on Wednesday.
Good Morning, and Happy December 23rd! With 2 days to go until Christmas, Santa has Equities in a festive mood, with the S&P up 40bp to start out last full trading day before the Holiday. Mega Caps are outperforming as NKE #s blew the doors off — pushing the DJ Minis up 50bp in early action. Over in Europe, markets are quite strong, led by a 2% surge in the DAX – Miners jumping 6% across Europe as commodities stabilise on Chinese stimulus banter this week, and I see every single major sector well bid across the continent and in London but in very light holiday volumes (most markets trading 30-40% light to trends). There are some pockets of weakness, with Semis lagging due to MU #s, and the Video Game Retailer sector getting pummelled after Game Digital’s warning. Over in Asia, Japanese markets were closed for the Emperor’s Birthday public holiday, and Shanghai lost 40bp as China sold off in the afternoon as shares reverted after testing new highs since Aug. crash – year-end profit-taking weighed sharply on the Technology stocks. Our desk in Kauai notes Brokers rallied in Hong Kong on news China may speed up IPO issuance next year — while every major EM in Asia was very well big going out.
Right now, Moves are mild in forex and fixed income in very light trade — the volume of Eurex Bund futures contracts pacing 40% light to 20day trends. That said, the selling continues in Treasuries, pushing US yields back over 2.25% and helping equities remain well bid. The DXY is retracing some of yesterday’s smackdown, as Euro retreats from the 1.10/200dma level, and most commodity currencies slightly weaken despite the stabilisation in Oil. WTI up nearly 2% and remains above Brent as API data last night showed a huge draw from stockpiles, despite a bigger build in Cushing — while Industrial metals continue to bounce, with Copper just off 1M highs.
We do have a few catalysts to react to today, starting at 8:30 with Personal Income and Spending; Core PCE; Durable Goods Orders from the USA along with Canadian Retail Sales. At 10am we get New Home Sales for November and U. of Mich. Sentiment for Dec — and the Oil Complex will be focused on DoE data at 10:30 – API said U.S. crude-oil inventories fell 3.6 million barrels (Estimates for a 1.2M build), while stocks in Cushing, Okla., rose by 1.5 million barrels (Street was looking for 1.2M build as well). At 11:30, the US Treasury sells $13B in 2Y floaters. While we have a full session today, Markets in Europe and North America will close early on Thursday and remain closed on Friday for Christmas Day.