Via Dave Lutz at JonesTrading, here’s a super quick guide to what traders are talking about before markets open on Wednesday:
Good Morning, and Happy Fed Wednesday! FOMC announcement at 2pm, there is no presser, and expectations rest at a 4% chance of a hike today (35% for Dec, where there is a presser) – US Futures are starting higher, gaining 20bp+ on the back of AAPL — the top weight in the SPY (3.56%) and QQQ (12.27%). European markets are in the whirlpool of earnings, with the DAX climbing 50bp as Industrials rebound from yesterday’s shellacking, and Healthcare continues to move higher on the back of Big Pharma. Over in London, the FTSE is lagging a bit as miners remain weak and Lloyds down 4.5% as it set aside another £500m for payment protection insurance. Over in Asia, according to our Kauai desk Asian Cyclicals hit as companies announcing earnings continue to cite outlook concerns on China slowdown while Apple related names underperformed. Nikkei gained 70bp despite the Yen’s strength, while Shanghai was hit for 1.7% – Finance and insurance stocks again weighed on Chinese indexes. Down in Aussie, they lost 20bp, weighed down by Banks on weak earnings. Emerging Markets remained full of Angst into the Fed meeting — with all firmly in the red.
The US 10YY is flat, trading in a 1bp range all overnight as we await Janet. Treasury bill yields have normalized as the House votes on Budget deal today — and the curve is mildly steeper, perhaps helping out those beaten-up Banks. The DXY is coming in quickly right now as the Euro gaps toward yesterday’s highs — but commodity currencies are weaker, led by that A$ as Aussie inflation posts the lowest in 3 years. With the weaker $US, Gold is lurching 50bp higher, but Industrial metals like Silver and Platinum are 1%+ higher. The Oil complex is having a 1% bounce as CNOOC, Statoil and Shell add to the trend of cutting investment in response to low oil prices — but caution remains ahead of DOE data later this AM. Softs are mixed, and Natty spot remains under pressure, but look for a sharp rebound as the contract expires today.
Ahead of us today, we have Advance Goods Trade Balance at 8:30, Metropolitan Area Employment & Unemployment at 10, and that DOE data for Crude at 10:30(API reported Crude Inventories Rose 4.1M, with a -748k draw from Cushing) — We have the “Main Event” at 2pm with the release of the FOMC decision. Down in Washington, the Full House votes on 2-year budget deal — at 9:30 Senate Minority Whip Dick Durbin holds a news conference to announce legislation to close 72-hour gun sale loophole — at 10am Senate Banking’s Financial Institutions subcmte hearing on rural banking and Senate Appropriations Subcmte holds hearing on unmanned aircraft systems, FAA Administrator Michael Huerta testifies — and at 1:30 House Republican conference selects their candidate for House speaker.