Via Dave Lutz at JonesTrading, here’s a quick guide to what traders are talking about as markets around the world sell off.
Good Morning! US futures are starting under sharp pressure, with the S&P off 1.5% and the Nasdaq off 1.7% as Biotech shares continue to accelerate to the downside. Headlines read “Global Growth Angst” as Asian Development Bank and Credit Suisse both pound the table on Chinese slowdown — but Asia has a decent session, with Shanghai and Korea adding ~1%, Hang Seng 20bp, and Aussie added 70bp. Japan’s Nikkei remained closed for public Holidays. The epicentre for the selloff seems to be Europe — with the DAX off 2.7% in heavy trade. Euro Car makers remain under pressure – VW trying to recover from another 20% drop this AM, hitting Peugeot, Renault and BMW. The Miners are getting destroyed overseas – GLEN breaking pricing, Outokumpu warning, Moody’s negative on China exposure, and CS downgrading several global heavyweights Overseas desks say it reeks of forced selling as Margin Clerks work double-time and companies enter the buyback blackout period into earnings.
We are seeing heavy buying in Sovs, with the German 10YY off 6bp and US 10YY off 3bp, but climbing off lows as investors eyeball another heavy day of Corporate secondaries. The Greenback remains well bid, as the Euro collapses below 1.12 despite Huge drop in Swiss watch Exports — fuelling fears the SNB will intervene again to weaken the Franc against Euro. Global growth proxies are getting hit, with the Aussie $US down sharply — and Crude, Copper, Iron Ore and Coal all lower. I only see Natty gas and Cocoa in the green right now, and even safety buying can’t buoy Gold — with the $US strength hitting the yeller metal for 50bp early. Commodity stocks look like they will be having a tough go early.
Scheduled Catalysts today include FHFA House Price Index at 9am, the Richmond Fed index at 10 along with Euro Consumer Confidence. At 1pm the US Treasury will sell $US26B in 2Y notes, ahead of Treasury Allotments data by investor class at 3pm. After the close, we get API data for Crude at 4:30, and Fed’s Lockhart (Voter, Neutral) speaks at 6:30pm. Yom Kippur begins at Sundown. Down in Washington, the Senate Armed Services Cmte has a hearing on Middle East policy at 9:30, CFTC Agricultural Advisory Cmte meeting on speculative position limits for agricultural commodities at 10:30 — at 11:30 IMF Managing Director Christine Lagarde speaks at a Brookings event – and at 4pm President Obama greets Pope Francis with VP Joe Biden at Joint Base Andrews while Democratic presidential candidate Hillary Clinton conducts an interview with Des Moines Register.
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