Via Dave Lutz at JonesTrading, here’s a super quick guide to what traders are talking about ahead of the Fed:
Good Morning, and welcome to Fed Day (No Presser, all about the Statement at 2pmET). Right now the “micro” is in focus, as earnings in USA (AAPL, X), coupled with a drop in Oil weigh on US futures. The Minis are off 60bp, but continue to bounce on 1880 in the overnight. Over in Europe, all exchanges are under pressure – European Energy companies hit as Oil falls and CS slashes #s on the majors, while big Pharma getting hit on Novartis #s — while Fins under pressure in London after RBS writedown, and Euro banks unimpressed with the Italy ‘bad bank’ deal. The DAX is down 1% with only Utilities and Telco in the green, while Italy’s market is whacked for almost 2% as banking shares get clubbed. Over in Asia, Shanghai dropped 3% to hit a fresh 1Y+ low before rebounding on PBOC Yuan headlines, while Covering continued ahead of BOJ in Tokyo, with the Nikkei rebounding 2.7% with Toyota/Suzuki tie up chatter boosting autos. Sydney came back from Holiday to lose 1.2% as miners lost early gains, but Korea jumped 1.7% and most EM Asian markets closed green.
No real “haven” bid this AM as we await Janet — while the Fed is expected to maintain the status quo, the accompanying statement will be key (Inflation, Market Angst, $ Strength, China Whipsaw, and New Voters will be focus). The US 10YY is higher, rebounding back to 2% in the overnight, while Gold is seeing some selling pressure after a nice run of late. The $ is breaking down into what many expect to be a very “dovish” Fed today, with Euro seeing covering — Yen gaining some upward mojo into BoJ Friday, and A$ popping on headline inflation #s, while Kiwi $ is flat ahead of RBNZ call tomorrow. All focus in commodities remains on Oil, where a Massive API Build of 11.4mln (street was looking for 4mln) has the complex down 3% and nearing another $30 test — but Natty remains bid, and important to see Copper holding in the green.
At 10am, we get New Home Sales for December, followed by that DOE data for Crude, Gasoline and Distillates at 10:30. Treasury has 2 auctions scheduled pre-Fed, with a $15B 2Y floater at 11:30, followed by a $35B 5Y Note auction at 1. The Fed’s Statement is released at 2pm, and Natty Gas watchers will be looking for a reversal of the recent cover bid as contracts roll over at 2:30 today. Heavy Earnings persist tonight, with EBAY, FB, LVS, PYPL, QCOM, SNDK, TXN and KEX among the names I am focused on. Down in Washington, House postponing votes until next week due to storm cleanup, while the Senate postponing votes until tomorrow. At 2:30, President Obama is interviewed by local television anchors about Obamacare; interviews released at 5 p.m.