Via Dave Lutz at JonesTrading, here’s a quick overview of what traders are chatting about this morning.
Good Morning – Global stocks are at record levels, and the Euro is getting hit sharply and German Bunds well bid as ECB’s Coeure Says ECB to Moderately Front-Load QE Buying in May, June before Summer Lull. Coupled with a crabby German ZEW we have Bund Yields off 7bp early and EU Stoxx up almost 2%. The DAX is adding nearly 2% as the Weaker Euro propelling Autos again over in Germany — and Consumer Discretionary shares leap almost 3%. Volumes are heavy across the continent, with most exchanges trading 20% heavier than recent levels. Over in Asia, Shanghai leaps over 3%, biggest gain since January – policymakers’ guidelines for economic reform the main driver there, while Aussie was hit for 80bp as Miners lost ground with ore back below $US60 a tonne. The Nikkei added about 70bp, driven by the exporters as $US/Yen hits 2M highs overnight.
The US 10YY is 5bp lower, and the curve flattening sharply, as a trifecta of headlines (Coeure, UK in Deflation, and German ZEW) all drive flows back towards Sovereigns. The Euro has initially cracked below 1.12, but is staging a minor rally as FX traders focus shifts toward 4 Central Banks later this week (Minutes from Fed, Boe, Aussie along with BOJ decision). The DXY was rejected from 95 overnight, but the bid under the greenback is causing a headwind for commodities — there is a sharp retreat in Metals, with Copper, Silver and Nickel all 1%+ lower — and a sharp move lower in Wheat (Record Short there). The Energy complex is mixed, with Brent and WTI lower ahead of API data tonight, while Natty is 1%+ higher as it continues to build a base over $US3. Ahead of us today we get Housing Starts and Permits for April at 8:30; Bank of Canada’s Poloz speaks at 11:30, and after the close we get API data for Crude, Gasoline and Distillates.