From Dave Lutz at JonesTrading, here’s a super quick guide to what traders are talking about right now:
Good Morning! Some sharp overnight moves in currencies and a dovish flush towards Treasuries have US Futures deep in the red early. Russell is losing 1% as the DXY falls to 16month lows, while S&P is down 70bp. This mirrors broad weakness across Europe, which sees the Miners whacked in London — Anglo off over 8%, Glencore 5%+ and sliding lower as Commodities drop and China’s PMI misses. Banks are under pressure in Europe on UBS #s, and coupled with weakness in exporters like BMW has the DAX down nearly 2% and approaching 50/100dmas. In Asia, Shanghai jumped 1.8% in thin trade as they returned from Holiday despite weaker PMI data, while Hong Kong was hit for over 1% – Aussie jumped 2.1% to a YTD high as the Reserve Bank cuts rates to a record low — but miners closed in the red. Thankfully, Tokyo closed till Friday.
Stops going off in Bunds pressing German 10YY down 5bp — hitting the US10YY under 1.8% in the early go and flattening the US front-end sharply. The Greenback remains in swandive formation, hitting 15-month low against Yen near $/Y 105. Euro advanced for a 7th day in its longest winning streak against the dollar since 2013, as Lifers in Japan unwind €/Y hedges below 122. Fed Funds collapsing to a 12% chance of hike next month the culprit here. Despite DXY whack, it feels like that commodity seller from yesterday still around. Gold unable to surmount $1300, while Oil drops 1% into Inventory data tonight. China PMI miss hitting commods, with Ore getting hit for 4% and Copper down 1.5% – Growth trades are accelerating to the downside.
Ahead of us today, we get Vehicle Sales for April released throughout the session — at 9:45 we get ISM New York, followed by our 1st of 3 Fed speakers today: Fed’s Mester (Hawk, Voter — Possible dissenter) Moderates Panel on Financial Markets at 10:30 – Fed’s Williams (Non-voter, Neutral) Speaks with Bloomberg Radio at 2, while Fed’s Lockhart (Non-voter, Neutral) Speaks tonight at 7. Right after the equity close, we get API data for Crude at 4:30. While the Senate and House are not in Session, the Federal Reserve set to propose so-called stays on derivative contracts that would prevent counterparties such as hedge funds, insurers and other companies from immediately pulling collateral from a failed bank. Indiana has its Primary tonight, and we shud wake up tomorrow to Donald being the Nominee – The latest WSJ poll shows Trump with a 15-point lead.
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