From Dave Lutz at JonesTrading, here’s a super quick guide to what traders are talking about this morning:
Morning! Futures rolling up to test highs as Oil moves to unch from -1.5%. Russell is gaining 50bp, and Mega-cap tech is holding on to a tenuous bid early.
Europe Markets relatively quiet into the ECB (7:45ET followed by Mario’s presser at 8:30am) — The DAX is adding 60bp on the back of Tech and Fins, but Discretionary and Autos lag as German exports fall short of expectations. London is off 30bp as Materials and Energy see profit-taking. Turnover very light with most exchanges 30-40% light to 20day averages.
In Asia, China’s CPI quickened in Feb +2.3% YoY (Jan 1.8%) as food costs climbed amid the week-long Lunar NY holidays — but Afternoon headlines that the PBOC to allow banks to swap bad debt for equity did not help the bulls in China, closing Shanghai down 2%. The Kospi gained 80pb as Bank of Korea stood pat on rates, while the Nikkei gained 1.3% as the Yen dropped sharply. Aussie closed down 15bp as the market digested the Kiwi Dollar move. Our desk in Kauai notes “Expect heavy volume on open tomorrow as it is big SQ in Japan.”
The US 10YY is basically unchanged, following muted moves in Bunds and JGBs overnight. The Euro is off small, languishing under 1.10 as we await Draghi. Yen continues to weaken, with $/Y approaching 114. That Kiwi $ is recovering some of the losses from yesterday, while commodity FX are mixed against the Greenback. Overall traders continue to watch 200dma support in the DXY at 97.07 — has held several times this month.
Japanese PPI deflates for 11th straight month and China’s PPI declines to a record 48 months — this is weighing on the base metals sector slightly, with Copper off small and Nickel hit for 1%. That said, Iron ore futures for May on Dalian Commodity Exchange climbed as much as 5.1%, highest for most active contract since June. Gold continues to see profit-taking, with the spot failing to regain $1250 in the overnight despite the DXY being near lows.
Oil has popped back to unchanged this AM, after falling as much as 1.5% in the overnight. $38.50 seems to be a early key resistance level for the bulls. Keep an eye on Gasoline, the active contract surged 5%+ yesterday on the inventory draw-down, and has rallied back to unch as well. Natty gas shorts continue to take profits, pressing it back into the green despite the warm weather brining the boaters back into the creek this early March Morning.
Ahead of us today, ECB statement at 7:45ET followed by Mario’s presser at 8:30am — Then we get Weekly Jobless Claims at 8:30 — The energy complex will focus on Natty gas Inventory data at 10:30. At 12 we get the USA’s “Household Change in Net Worth”. Treasury gets busy this afternoon, with a $12B 30Y auction at 1 (Yesterday’s 10Y auction was very weak) — and at 2pm they release the Monthly Budget Statement. Down in Washington, at 11:40 President Obama and Canadian PM Trudeau hold joint press conference, and at 12 the EPA holds a teleconference meeting to discuss draft report on fracking’s potential impact on drinking water supplies.