Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are talking about on Wednesday morning:
Good Morning! US Futures are bucking the sea of red in Europe, with the S&P adding 30bp early as earnings headlines continue to roll through. The sellers have control in Europe again however, with Financials continuing to hemorrhage – Banks are among the top five fallers on the FTSE, which is off 60bp — while several Italian banks were trading “limit down” earlier. Discretionary shares are bucking the trend on the back of LVMH #s, while Energy shares are showing a tepid bounce as Oil recovers back over $30 in the States. In Asia, China closes mixed ahead of Lunar Holiday, with Shanghai off 40bp and Shenzen up 50bp — It was all red otherwise, as Aussie has its worst day of 2016, dropping 2.3% – while Tokyo dropped by more than 3% as the Yen gathers upward momentum, creating massive headwinds for their exporters.
Despite this angst, we do not see Haven trades occurring this AM, as the US 10YY is bouncing sharply off overnight lows of 1.82% in the overnight, and Gold falling under some profit-taking after its recent run. The DXY is coming under some pressure, losing ground to Yen as Y120 is breached with traders shrugging off Kuroda’s comments overnight and continuing to challenge the BOJ. The Euro is reversing from Hawkish comments from ECB’s Mersch as Eurozone economic growth slumped to four-month low last month. Short Covering continues in Copper ahead of China’s New Year Holiday, helped as Caixin Services PMI data out of China came in stronger than expected. Focus remains on the Crude Complex, where WTI is gaining 2.5% and back over $30 despite API showing a build of 3.8M last month, ahead of street guesstimates of a 3.75M build. Keep an eye on Natty gas — off another 1%+ as headlines spark concerns a price war with Gazprom is coming.
Ahead of us today, Jobs week gets into full swing with the release of ADP Employment data at 8:30. At 9am we get the US Treasury’s quarterly refunding announcement. 9:45 brings the release of Markit US PMIs, ahead of the “Official” ISM Services data at 10. At 10:30 we get that DOE data for Crude, last night API showed a Overall Build 3.8M. Cushing +141k / Gasoline +6.5m / Distillates 400k. Down in Washington, at 10am the American Bankers Assn holds news conference to present monetary policy predictions and consensus economic forecast.
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