Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are talking about on Wednesday morning:
Good Morning! US Futures are well bid early, with Nasdaq up 70bp (AAPL 1%), SPX 50bp, but that Russell lagging with only a 35bp gain. The Russell has lagged Spoos 8 of the last 9 sessions, losing an additional 3% since the start of 2016. Euro markets are jumping across the board, with Oil and gas shares leading overall. The DAX is up 80bp as China-exposed stocks rebound — led by Luxury goods makers and German exporters. Euro Stoxx up 1.3% in heavy turnover (1.4x average) as Banks catch a bid on the back of Italian Merger headlines. Over in Asia, the PBOC kept the renminbi basically steady for a fourth straight day — but Shanghai dropped ~2.5%, closing below a key 3,000 level and bringing 2016 losses to 16% – shipbuilders, construction material and aircraft manufacturers leading the decline. High-Tech laden ChiNext dropped 4%. It was a sea of green otherwise, with Aussie climbing 1.3% on rebounding financial and energy stocks, while the Nikkei rallied 2.9% on the back of exporters as the yen dropped. Emerging Markets were green across the board.
The US 10YY is up 3bp, following some weakness in bunds — but still remain firmly below the 200dma. Much focus of Treasury traders will be on the AB InBev offering today, along with whether the Crude complex can hold a bid ahead of a 10Y Auction today and 30Y tomorrow. The DXY remains just off 2016 peaks as the Yen breaks down (Leverage being embraced) and Euro drops to test the 50dma as Eurozone industrial output disappoints. The Stronger greenback is a headwind for commodities — yet Industrial metals are showing some life, led by a 1% big in Platinum and 50bp bid in Copper. Gold remains off 20bp after bouncing several times off 1080 in the overnight. The Oil complex has a decent bid to it, as API draw and Chinese data showing record imports of Crude and refined products have the complex jumping 2.5%+. Let’s see if that bid holds as Traders see the massive build in refined products again, driving Gasoline contracts 50bp lower.
Ahead of us today, Fed’s Rosengren Speaks on Economic Outlook at 8am, we get that DOE data for Crude at 10:30 — last night API showed Crude -3.9 mil (Street thinking build 2mil), Cushing -300k (thinking build 1mil). At 1pm, the US Treasury auctions off $21B in a 10Y reopening — ahead of the 2pm release of the Beige Book from the Fed and the Monthly Budget Statement from the Treasury. Quiet down in Washington, as the House and Senate Republicans begin three-day strategy retreat in Baltimore — While the Volkswagen CEO meets with EPA Administrator McCarthy at some point. Earnings for the Tech space ramp overnight, with the releases from Infosys and TSM — ahead of the INTC headlines after the bell tomorrow.