From Dave Lutz of Stifel, Nicolaus, a quick guide to what traders are chatting about this morning.
Good Morning! US Futures higher by 40bp, but a weak “Yellen Bounce” thus far given Markets have dropped 11 times in 14 trading sessions. 10YY off very small, Gold weaker, DXY stronger — all telling you this was well expected. Nasdaq futures outperforming slightly as AAPL bid up 1% on chatter of a iPad update on Oct 22nd. The DAX is staging a small bounce, up only 22bp — as Volumes remain light in Europe. The Yen has reversed recent strength, failing the 200dma as sparking a 1% gain in the Nikkei. China popped 60bp, led by Banks on Sept Loan data, The Nifty jumped 1.3% on better current account figures — Aussie was quiet and EM Asia was mixed. Given the US Data Vacuum, the Fed minutes will be thoroughly scrutinized for Tapering clues, although the current DC Circus probably sidelines any tapering till 2014. Yesterday’s VIX volume was a record as 1.8mln contracts trading hands. VIX Calls outweighed puts by 2-1 as the S&P is nearing major technical and sentimental support — and a Tale of 2 earnings, YUM getting smacked, while AA is up over 3%
The 10YY is off small, but more focus remains on the Halloween T-Bill Yielding 26bp, down 7bp overnight. We do have a $US35B 5-day auction at 11:30, but focus is on the $US21B 10Y auction at 1 (Given duration, should be quite smooth, unlike yesterday’s 1M auction) — With the DXY surging, we have a headwind for commodities, and we are seeing Gold coming off 1%+, but Industrial commodities like Copper and Oil are outperforming the precious metals — Last night, API reported a Heavy build in Crude Inventories ahead of DOE today amidst reports Iran is readying a proposal on their Nuclear program for the UN.
House Republicans and Senate Democrats will be continuing down separate legislative paths Wednesday, as each chamber considers bills on separate fiscal crises — GOP controlled House is expected to continue passing a series of small-ball spending plans for popular or important government program — In the Senate, rather than considering new funding bills to open the government, Reid is beginning to put together legislation that would allow the Treasury greater borrowing authority to avoid breaching the so-called debt ceiling.