Via Dave Lutz at JonesTrading, here’s what traders are talking about before the market open.
Morning, and Happy Friday! US Futures starting red as Last 7 of 9 Fridays ended lower. Month end is tough seasonality for bulls as well — so the S&P is looking 15bp lower, while the Russell is dipping 30bp. Markets in Europe are mixed, with the FTSE lower as energy stocks get hit — while the DAX is up small, torn between weaknesses in Fins across the continent, to continued buying in Industrials. Over in Asia, the Shanghai Composite lost 1.1% on Fridayafter late day buying surged it off lows. Shanghai lost 10% on the week dragged down by energy and industrial companies. Aside from China though, the bulls were firmly in charge across Asia — with many Emerging Asia exchanges finally seeing sharp inflows — Jakarta, Thailand and Malaysia all gained 1.3%+ in heavy turnover. The Nikkei gained 30bp to sit just 1.4% below its 19-year high touched in June — Aussie added 50bp as Consumer shares outperformed the sharp weakness in Materials – Aussie just logged the first monthly gain since February
The US 10YY is bouncing slightly from yesterday’s sharp weakness, while earlier the “Policy Sensitive” 2-year Treasury yield touched 0.75 per cent, its highest level since April 2011 — and Futures markets are now pricing in a 50% chance of a hike in September. Despite this, the Greenback is seeing some weakness against Yen as yesterday’s move consolidates — Euro rallies back towards Yesterday’s peaks at 1.10. Those commodity currencies are acting awful again, with Aussie and Loonie taking out the month’s lows. Oil is getting whacked for almost 2% on headlines about record exports from China, Iran and Iraq — while all the metals are lower, led by a 1.5% drop in Platinum (car sales next week — China focus), and a 1% drop in Silver. Gold’s fall continues, dropping towards a test of July’s 5Y+ intraday lows as headlines “China’s H1 gold consumption plunges 19% on year” weigh.
Scheduled catalysts today include the US Employment Cost Index and Canadian GDP at 8:30; ISM Milwaukee at 9 — ahead of the quirky release at 9:45 of the Chicago Purchasing Manager index (released 9:42 for paying subs) — then nothing till the Baker Hughes count at 1, followed by the CFTC “Commitment of Traders” data at 3:30. Focus will shift quickly to China’s Manufacturing and Non- Manufacturing PMI tonight, ahead of BOJ, India, Aussie, and BOE decisions next week. Washington DC is quiet, with the Senate out of session, and the House members hustling to Reagan National sooner rather than later today.
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