Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are chatting about this morning:
Good Morning! US Futures are holding steady after yesterday’s selloff — there was a Heavy rotation from Equities into Treasuries that began around 12ET yesterday and accelerated into the US Close. The 3G for KRFT deal has US futures basically flat, but Europe is a sea of red as Greece goalposts get moved forward and noose tightening (ECB will move to officially ban Greek banks from increasing their holdings of the country’s short-term sovereign debt). The DAX is off 70bp, but Volumes are quite light, with most major markets trading 25-30% lighter than normal averages. Industrials and Tech are the hardest hit sectors in Germany, while Fins are outperforming but remain red. Over in Asia, Shanghai Composite fell almost 1%, breaking a 10-session winning streak — the longest in 23 years, while Aussie closed flat as the Miners benefited from a rebound in Ore prices overnight. Japan ripped 100bps in the evening session after breaking for lunch in negative territory. The PM move resembled BOJ buying patterns, which were in focus after Nikkei ran a story pre-market highlighting their equity portfolio has hit ¥10t, second in size only to the GPIF.
A bid remains for US treasuries, especially in the long end where there was heavy chatter of “real money” buying yesterday. The 10YY is off 1bp and taking out yesterday’s lows as it breaks toward 1.85%. The DXY is back under 97 as stronger-than-expected German business optimism buoys the Euro towards 1.10 again (heavy resistance there y’day) and the Yen gathers some upward momentum. This tailwind is not helping WTI into Oil Inventories at 10:30 – Last night’s API data showed a larger than expected build – Crude: +4.8mm / Cushing: +2mm. Brent is holding better as Saudi stocks are getting hit sharply on Yemen instability, while Natty gas meanders near unch. The metals complex is mixed, with Platinum and Gold slightly better, but Copper is retreating from the recent surge. Softs are mixed as they see profit-taking from the recent move higher. Scheduled Catalysts include Durable Goods Orders at 8:30; DOE data for Crude at 10:30; a $US13B Floater auction at 11:30, ahead of the $US35B 5Y Auction at 1