Via Dave Lutz at JonesTrading, here’s a super quick guide to what traders are talking about before markets open on Wednesday.
Good Morning! US Futures are mixed, consolidating yesterday’s sharp allocation gains. European markets are playing catch-up to the S&P move yesterday, with the DAX gaining 60bp as Discretionary and Tech shares continue to find favour — M&A headlines are helping the bulls, with SABMiller leaping on InBev chatter. The FTSE is gaining 70bp on the back of the miners as Glencore holds 125p offering pricing — only the banks are in the red as a group in Europe today. Over in Asia, Shanghai did its rally dance into the close again, gaining nearly 5% on the session – Short covering continues as TSE short ratio slides in Tokyo, sending the Nikkei up nearly 1% – and China Proxies Aussie jumped 1.6%, Hong Kong popped 2.4%. Heavy focus on Emerging Markets into the FOMC, and they are mostly in rally mode, with Korea gaining 2%, India 1% and the bulk of EM Asia closing in the green.
US Treasury yields holding yesterday’s gains as bund yields rest on highs as heavy supply comes in Europe. As day one of the FOMC begins, this week’s global equity rallies has to soothe jitters on hiking — and despite Fed Funds showing a 32% chance of liftoff (highest in 1 week), that “Policy Sensitive” 2YY holding near 4+ highs after yesterday’s surge. The DXY is ripping higher again, as the Euro is weaker as inflation metrics revised lower — The Yen breaks towards pre-BOJ lows as Japan downgraded by S&P — and that Aussie$ continues to see covering on China optimism. Oil is your best performing commodity, gaining 1.5% after API data last night showed a massive draw ahead of DOE today — Natty gas is reversing some of this week’s weather-induced strength, while we continue to see profit-taking in the Grains. Metals are mostly higher, led by a 1% pop in Silver, while Gold drifts just off 1M lows.
As Janet & Co meet for Day 1 of deliberations, we do have some scheduled catalysts today — US CPI and Average Weekly Earnings hit at 8:30, NAHB Housing Market Index at 10am, and at 10:30 we get that DOE data for Crude. At 4pm tonight we get Treasury’s TIC flows — while Options players will be watching the current VIX contract expiring during the session. Chatter has Bridgewater head Ray Dalio would be speaking at a 6pm interview on Bloomberg. In Washington today, at 10am the Senate Finance Cmte marks up legislation preventing identity theft, and the Senate Foreign Relations holds a hearing on fight against ISIS. At 8pm tonight. We get the GOP debate tonight from Reagan Library.
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