Here’s what traders are talking about this morning, via Dave Lutz at JonesTrading:
Good Morning! Equities seeing profit-taking from 2M highs, with the SPX trading down 50bp and near Friday’s lows by 1985. This mirrors weakness across the board in Europe, despite the continued rally in Commodity stocks. Consumer Discretionary shares are retreating, and Airlines are under some pressure as FastJet off 33% on #s. Banks are seeing profit-taking as well, offsetting continued rallies in those commodity levered sectors – Energy Equities continue to rally as Brent hits 3M highs, but London is off 1% as miners are unable to join the global rally as profit-taking reigns and UBS downgrades Anglo to “sell”. Volume across the continent is generally light as we await Mario later this week. Over in Asia, Shanghai liked the dovish tone coming from the National Congress, with equities adding 80bp to last week’s rally, while Japanese shares snapped a four-day winning streak as the yen strengthened. Down under, Mining shares helped propel Aussie to highest in 2 months.
The US 10YY has breached 1.9% to the upside, as hawkish positioning continues on the back of better US Economic data. Interesting tho, Bunds are sharply bid and the Euro is breaking down into the ECB on Thursday — So the weakness in Treasuries may prove temporary. Collective FX ‘sigh of relief” as China’s foreign exchange reserve drain is not as bad as feared — but that Yen is gathering more upward mojo as Kuroda plays down the likelihood of additional stimulus. With the DXY higher, we have a headwind for commodities, but metals are following the 19%+ Surge in Iron Ore Futures following China plans to resolve overcapacity in steel and coal industries — Dragging even Gold into the green despite the recent surge higher. The Crude Complex continues to trend higher as well, with Brent crude above $39 per barrel for the first time this year.
Ahead of us today, we get the Labour Market Conditions Index at 10, then a double whammy of Fed Headlines at 1, where Vice Chair Fischer Speaks at Annual NABE Conference in Washington and Fed’s Brainard Speaks at International Banking Conference. At 2pm, we get the EIA monthly drilling productivity report, followed by US Consumer Credit at 3pm. Down in Washington, at 11 President Obama meets with financial regulators at White House, and at 11 the EPA holds teleconference meeting of Hydraulic Fracturing Research Advisory Panel to review draft report on potential impact of fracking on drinking water supplies.