Via Dave Lutz at JonesTrading, here’s a quick overview of what traders are talking about on Friday morning:
Good Morning, and happy Expiry Friday! Spoos diving red here, following Oil. WTI off 2% and nearing a $30 test. Expiry Monday looms large. S&P is off 40bp as equities come for sale in Europe — The DAX is off 1% as Financials resume their clubbing overseas, knocking Italy down over 2%. Very broad based selloff in the Continent, with every major sector retreating, led by Banks and Consumer Discretionary shares. In London, “Brexit” angst continues to mount as the EU summit has produced no major agreements, but the FTSE is outperforming as Staples bounce and London banks hold in better than their global counterparts. Over in Asia, Shanghai was broadly flat, Hong Kong dropped 40bp in very light turnover – China and HK were pressured on headlines the PBOC would raise RRR for banks that increased lending too fast – Tokyo lost 1.4% as the Yen continues to break higher and Banks saw profittaking from the week’s surge — Nikkei closes with a ~7% gain for the week – Sydney retreated 80bp following their best session of 2016 yesterday — up 4% on the week. EM Asia was mostly lower, with the notable exception Thailand, which leapt 2% as Energy companies led the charge.
Strong bid overnight for Global Sovs, with JGB’s going negative before recovering — this has Germany’s 10’s under 20bp, a sharp move from yesterday morning and has the US 10YY pinned to yesterday’s floor near 1.72%. Maybe some Geopolitical angst, as the Syria Cease-Fire in jeopardy and Some PIIGS stress building ahead of a Tsipras meeting with Merkel and Hollande. The Euro was initially getting whacked as German PPI comes in light — 30th month of contraction, but is recovering as the $ retreats AGAIN from the 200dma. $/Y under 113 — The Yen has now gained 5% since BoJ introduced negative rates. We hav a bid across the board in Metals, with Gold adding 70bp and confounding shorts as it nears y’days peaks near $1240. All eyes remain on the Energy Complex as WTI’s spot contract nears extinction — The April Contract has already traded 10x March, which expires Monday. No rebound in Natty, which is down another 50bp as warm weather, La Nina and Heavy Stockpiles weigh.
Ahead of us today, we have a big Fed hawk speaking (Mester) at 8:30, right when US CPI data hits. At 10am we get EU Consumer Confidence, then the Energy Complex turns its attention to the Baker Hughes Rig Count at 1pm. 3:30 brings the release of CFTC’s “Commitment of Traders” data. Down in Washington, the House and Senate are not in session as most Politicos pay respects to Justice Scalia as he lies in repose at Supreme Court from 10:30am to 8pm.
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