Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are talking about before markets open on Wednesday:
Good Morning! US Futures are showing a tentative bid, led by a 20bp pop in the DJIA on headlines DuPont and Dow in $120bn deal talks. Over in Europe, the DAX is nearing unchanged on the back of VW headlines, which sees the stock up 5% in afternoon action — helping propel Consumer discretionary shares higher. The rally is on thin ice, as the selloff in mining companies extended to a 7th day, plunging to 11year lows in London. That said, the FTSE is up on the day, rallying on the back of Industrials and Staples. Over in Asia, Chinese Inflation data came in higher than expected — but Shanghai closed up small. Our office in Kauai noted that Strong machine orders supported Japan early but the NKY met resistance at its 200 DMA and ultimately rolled over as the yen gained. Aussie finished in the red despite gold mining stocks acting well thanks to an afternoon selloff in the big banks — while nearly every emerging market continued to be battered.
The US 10YY has gained 2bp, but continued to find heavy resistance around the 2.25% level. Those Fed Funds are at a record high 80% chance of Fed liftoff next week, while that “Policy Sensitive” 2YY is climbing 1bp in early action. That said, the $ is losing ground against the basket, as Commodity-linked currencies are stronger, Euro jumps on solid IFO data from Germany, and that Yen gains on Economic data from Japan. With the weaker $, Commodities are taking advantage of the tailwind — Copper, Nickel and Silver are all up 1%+ – while Gold is showing a meagre 35bp advance. The Energy complex is acting better, thanks to API showing a huge draw last night of 1.9M barrels (Street was looking for a build of 1.3M), helping Oil bounce 1.5% into DoE data later today.
Ahead of us today, we have US Wholesale Inventories at 10, DOE data for Crude at 10:30, World Agricultural Supply & Demand Estimates at 12, and a $21B 10Y auction at 1pm. Down in Washington, all eyes are on a Senate Special Committee on Ageing holding hearings on drug prices at 2:30pm.GLX
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