From Dave Lutz at JonesTrading, here’s a brief guide to what traders are talking about this morning:
Good Morning! US Futures are retreating slightly, dropping 25bp, as expected profit-taking from yesterday’s rally, coupled with a 2% drop in Oil, weigh early. It’s a Green day overseas though, with Europe going for 5 in a row, would be longest winning streak in 5months. The DAX is adding 20bp as sharp upward moves in Fins and Discretionary offset weakness in the Industrials and Materials. The FTSE is a standout, losing 30bp despite rallies in the Banks and Miners. Volumes are better in Europe today, with most markets trading average, as opposed to the light trading that dominated the start of the week – Over in Asia, China ripped 4.2% higher, dragging Hong Kong along for 3.1% – our Hawaii desk noted “China property was strong on easing home purchase restrictions and brokers jumped on relaxed margin lending terms” — India’s Sensex added to yesterday’s best session in 7 years, jumping another 2% – while Aussie rallied 2% led by banks and energy. The Nikkei was a sharp outperformer, gaining 4% as hopes for further action by BOJ weakened the Yen, coupled with strong Auto sales data lifting their exporters sharply.
The US 10YY is higher once again, stretching its legs above yesterday’s peaks near 1.84%. That “Policy Sensitive” 2YY continues to trend higher along with Fed Funds as better US data along with optimism for a strong Jobs report have the Hawks circling. The $ continues to rally, making gains against Euro as weak inflation data grips the continent ahead of ECB Next week, and Yen which continues to slide lower as risk taking sparks levered bets. Despite the stronger $, Gold is higher again, yet it is industrial metals that are flying — Copper gaining 1.3% and eyeballing highest close since November. The Oil patch is weaker tho, as API showed a 9.9Mbbl build, 3x the 3.25M expected ahead of DoE data later today (Will be interesting if DoE data comes in much lower like it did last week, sparking a sharp rally). Natty continues to slide, dropping another 1.3% as Americans start dusting off their flip-flops.
Ahead of us today, we get ADP Employment Change at 8:15, followed by ISM New York at 9:45. At 10 Fed’s Williams Speaks, and we get the Online Help Wanted Index. 10:30 brings that DoE data for Crude. 2 catalysts outside of the US at Noon, with the Canadian 30Y Auction and ECB’s Cœuré speaking in Brussels. At 2pm eyes focus on Washington when the Federal Reserve Releases the “Beige Book” setup for the next FOMC. Down in Washington, at 9am EPA Administrator Gina McCarthy delivers keynote address at Advanced Research Projects Agency-Energy (ARPA-E) Energy Innovation Summit, while at 10 FCC Chairman Tom Wheeler testifies before Senate.
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