Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are talking about ahead of the market open:
Good Morning! Markets are continuing their hawkish positioning, with Fed Funds showing a 32% chance of a June Hike, Was 4% this time on Monday. All eyes on 2 Voters speaking today – Fischer (9:15) and Dudley (10:30). The SPX is off 28bp, and rallying quickly from lows as WMT jumps 4% early on #s. Over in Europe, a Possible terror attack on EgyptAir flight has travel stocks under pressure — that coupled with a sharp drop in HC stocks in Germany (Bayer confirming MON) has the DAX off 1% in heavier than normal Volume. FTSE is fairing worse, as Miners getting hit for 4%+ in London. Over in Asia, Nikkei gained 10bp as Yen fell, while the Mothers Index rebounded 1.5% from yesterday’s slaughter – China was little changed as the yuan traded to the lowest level since Feb, Aussie was hit for 60bp as Miners weighed, while April’s FOMC hawkish minutes weighing sharply on Emerging Markets globally.
With that “Policy Sensitive” 2YY holding near 2month highs – the DXY is sharply higher against major Asian currencies, while Commodity currencies, led by Aussie, drop quickly on hawkish repositioning. Sterling is at a 3 1/2month high on Brexit polls (remain gaining) and strong retail sales data, that coupled with the FOMC has Bunds and Treasuries under pressure once again, both yields flirting with yesterday’s highs. It’s a fugly day for Commodities, with Ore losing 1.2%, Rebar 60bp in China — and we have Metals red across the board in the States, as Silver drops 3%, Gold 1.5% and Copper 1%. WTI is off 2% and under $48 ahead of the contract roll today, as supply disruptions in Canada and Nigeria begin to abate. Natty is losing 1% ahead of inventory data later today, failing to hold upside $2.
Ahead of us today, we get ECB Minutes at 7:30 — then heavy headers at 8:30 from Weekly Jobless Claims, Chicago Fed Nat Activity Index and Philadelphia Fed Business Outlook hitting. Fed’s Fischer (neutral, Voter) Speaks in New York at 9:15, just ahead of the Leading Index at 10. Fed’s Dudley (dove, Voter) Speaks on Macroeconomic Trends at 10:30, right when that Natty Gas Inventory data hits. The US Treasury is selling off $11B in TIPs at 1, and at 2:30 WTI Contracts roll with the close of NYMEX Trading. We could start getting headers from G7 – Treasury Sec. Lew arrives in Japan for G-7 finance ministers and central bank governors meeting.
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