Via Dave Lutz at JonesTrading, here’s what traders are talking about before the opening bell.
Good Morning! US Futures are firmly in the green, with the S&P marked up 40bp and thru yesterday’s 2085 peaks. Unlike the last several sessions, however, US markets are lagging Germany — which sees the DAX up 1.1% led nu a jump in Materials and Consumer Discretionary. Even the banks are rallying, despite worsening Greek headlines, and S&P downgrades of several majors (DBK, CBK, ERSTE, BARCLAYS, RBS, etc). Our London Desk notes Euros futures to cash ratio 5.5x. Current SX5E vols -20% below recent averages. Perhaps we are seeing a relief rally in developed markets, as MSCI opted not to include China in it’s a-share indices. Chinese markets initially saw some weakness, but with the street underweight China, and eventual inclusion predicted — the “buy the Dip” crowd pushed Shanghai near unch and Shenzhen up 2%. The Nikkei was under pressure, losing 20bp as Yen jumped on Kuroda comments; Aussie breaks a 6day losing streak, and emerging market stocks rise, breaking a run of 12 consecutive daily losses, the longest losing streak since Sept 1990. The standout loser was Hong Kong and South Korea — as MERS concerns spike further. Asian Airline stocks under sharp pressure
The German 10YY is driving the global bus this AM, breaching 1% to the upside, and dragging the US 10YY towards 2.5% in early trading. The Bund yield’s move is encouraging more euro buying, which saw the Euro approach 1.14 in early trade, and has since retraced back lower. The DXY is weaker though, as BOJ’s Kuroda intimated that the Yen’s weakness had probably gone far enough, causing a 122.50 test. Japan’s economy minister Amari has just said that Kuroda’s comments might be distorted from what he meant, helping the Yen weaken a touch. The Oil Complex is jumping, led by a 2.5% move in WTI as API crude oil inventories showed a drop of -6.7mln bbls. DOE today, Street is looking for a drop of -1.3mln. We are seeing a bid in most commodities, led by a 1.5% move in Copper in the metals, and a 50bp pop in Wheat in the softs. At 10:30 today we get DOE data; at Noon WASDE hits for Agriculture; at 1 the US Treasury looks to sell $US21B in a 10Y reopening — and we get Treasury’s monthly Budget statement at 2pm.