Via Dave Lutz at JonesTrading, here’s a brief guide to what traders are talking about:
Good Morning! US Futures are dropping almost 1% as Equities follow the Oil chart, and G20 Expectations get scaled back sharply. With China guiding the yuan weaker for a second day in a row, Trump steamrolling Nevada, and DeMark Gurus noting “Bearish Price Flips” on INDU, SPX and NDX (Eyeballing a possible 8% pullback from here) — we have a nasty global equity market on our hands. In Europe, the DAX is getting smoked for 2.5% led by a sharp pullback in Discretionary shares, while no major sector is holding a bid. Financials are outperforming, but hats not helping the Fin Exposed Italian index, which is nearing off 3%. Miners leading declines in London, which sees the materials sector off nearly 5%. Overall, Euro volumes are pacing quite light to recent trends, a balm to the wounded bulls. In Asia, the Nikkei lost 90bp as Yen continues to rally, Hong Kong just over 1% lower as Energy companies weighed, Aussie shed 2.1% as Miners and Banks weighed — while China reversed early losses to climb 90bp on the back of infrastructure companies.
Haven Trades en fuego this morning – Kuroda Speak knocks JGB yields further into negative territory, with their 10’s now yielding -5bp. This has German 10’s only 13bp away from the zero bound, and a sharp bid under US paper, with our 10YY back under 1.7%. The Greenback is in moonshot formation, as Euro gets whacked and Sterling another new low as HSBC warns Brexit could knock 20% out of the British Currency. Despite the flying $, havens have Gold ripping higher, up 1% and nearing $1240 — meanwhile other Industrial metals are getting whacked, led by a 1.6% drop in Copper. Energy complex remains in acute focus, as WTI drops another 3.5% as headlines hasten its approach to $30 (Saudi comments yesterday couples with API data showing a build of 7.4mm, more than 2x anticipated).
Ahead of us today, we get Markit US Services PMI at 9:45, just ahead of the New Home Sales for January at 10. 10:30 attention swings to the DoE Data (Street at 3.25mm build), then we have 2 Treasury Auctions to contend with: A $13B 2Y floater at 11:30, followed by a $34B auction of 5Y notes. 2 Fed speakers round out the afternoon’s fun – Fed’s Kaplan Speaks in Dallas at 1:15 and Fed’s Bullard Speaks in New York tonight at 7. Down in Washington, there are House and Senate hearings on Zika virus — while at 10 a House Financial Services subcmte holds hearing on “The Impact of the Dodd-Frank Act and Basel III on the Fixed Income Market and Securitizations”.
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