Via Dave Lutz of JonesTrading, here’s a quick guide to what traders are chattering about this morning:
Good Morning — US Futures are holding yesterday’s gains, led by a 30bp pop in the Russell, but Nasdaq and S&P just dipped red. Yesterday’s action had the classic feel of a short-cover across the board — we saw capitulation in Energy (XOP, but not WTI) — and it’s Important we get follow through in the Miners — GDXJ/GDX were among the first commodity ETFs to crack. GDXJ closed 13% above its low, and bid is up 1% now. The FTSE is under slight pressure as BOE stays unchanged – Germany just reversed it’s 1% gain to slide towards unchanged, with volume pacing slightly heavy – Draghi speaking at 11 should be a focus into the EU close as we got Bad trade data out of Germany putting more pressure on the Bundesbank. Over in Asia, Weaker Dollar against the Yen hit Tokyo, Nikkei lost 80bp despite better machinery orders — while Shanghai continued marching forward, India recovered 1% and Miners boosted Aussie, ASX gaining over 1%.
The US 10YY is dropping quick, breaching 2.29% this morning — sharp demand for Sov paper overseas has Germany’s 10YY taking out lows, and seeing Record Lows in some Sovereigns: Portugal, Spain, France, Finnish. Japan’s 10YY is under 50bp (US yielding 1.75% more), and Germany’s 10YY at 86bp (US 1.4% higher) — that’s keeping a sharp bid under Treasuries. Dovish tailwinds in last 24hours from the Fed minutes (idea of being “lower for longer”), as well as speeches by China’s Premier Li (Targeted Easing) Kuroda (BOJ has “many options” for additional easing), Bernanke (Stock prices are “within historical norms” relative to returns on bonds) all pushing yields lower. Fed Fund Futures this Am have pushed the 1st Fed hike to November ’15, from Oct ’15 last week. That “Policy Sensitive” 2YY is coming in sharply as hawks retreat.
The $US is under some pressure this morning, losing ground against Yen, Euro and Pound. Despite this tailwind, the energy complex is under pressure, with WTI, Brent, Natty and Gasoline all red. The upshot continues in Gold, with the metal up 2%, and beaten-up silver up 3%. Copper is moving higher, so we may see some follow through in Industrials today. We get Weekly claims at 8:30, Fed’s Bullard (centrist) at 9:45, Wholesale Inventories at 10 — there is NO POMO at 11, but we do get ECB’s Draghi, Fed’s Fischer (Hawk) Speaking on Europe. At 12, the beleaguered retail sector will be getting Chain Store Sales Trends, and we have a 30Y auction at 1. The afternoon closes with 3 Fed speakers – Fed’s Tarullo (dove) Speaks on Bank Regulation Panel at 1:10, Fed’s Fischer (hawk) Speaks on Global Economy Panel at 1:30, and Fed’s Williams (dove) Speaks on the Economy at 3:40.
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