Dave Lutz of Stifel, Nicolaus discusses the top topics about which traders are talking about this morning:
Good Morning, and welcome to Quarter End! US Futures are starting on a upbeat tone, adding 40bp as the S&P has been stuck in a 40point range for last 5 weeks. EU Futures are mixed in light volume however, with Germany trading flat on volume 40% light to the 20day average. We have all kinds of stability in Emerging Markets, with Moscow up 1% as US and Russian counterparts meet – Turkey’s Lira in rally mode after their election results, and FTSE’s Emerging Market Index continuing it’s 8 session winning streak – nearing unchanged on the year. Over in Asia, The Nikkei gained 1% as economic data posts light, buoying hopes of a accommodative BOJ as Japan’s national sales tax goes up from 5% to 8% on Tuesday, expected to cause a big headwind for the economy. China was mixed, but Aussie gained 50bp on the back of the Miners jumping. Globally, Banks and Material stocks seem to have a nice tailwind, while there is some profit-taking in the Industrials. Into the last day of the month and Q — watch for rebalancing to continue as the Barclays Global Aggregate Bond Index outperformed the S&P by 2% YTD
The 10YY is 2bp higher, and testing the 2.75% level after getting back upside 50dma on Friday. There is heavy attention on the short-end of the curve, where selling in US 2Y paper has driven yields the widest from German 2Y paper in well over 1 year — this has the € higher despite weaker inflation data posted in EU ahead of ECB on Thursday. The DXY is weaker as the Yen and € are breaking higher, a nice Commodity tailwind. We have a nice bid in Silver, and Gold is posting a small gain, but failing to retake $US1300/oz early. Copper is weaker on profit-taking, as last week say the biggest weekly gain in 6 months. The Endrgy Complex is weaker, with Natty dropping 1% on warmer weather patterns globally, and WTI is off small as Barron’s cover opines on $US75 Oil. Ahead of us today, we have ISM Milwaukee at 9, at 9:45 we get Chicago Purchasing Manager (9:40 for paying subscribers) — Annual Wholesale Inventory and Sales Revisions at 10, and the Dallas Fed data at 10:30.