Dave Lutz at JonesTrading has the top topics about which traders are talking about today:
Good Morning! US Futures are under some pretty good pressure — The Russell is off 90bp as more growth concerns from EurAsia mount into Q end. Schools and banks closed in Hong Kong as protests intensify — there is concern that the protests could spark similar activity on the Chinese mainland, further slowing their economy. The Hang Seng dropped 1.9 per cent and the Hong Kong dollar hit a six-month lows as “Golden Week” approaches – The market will be closed in HK Wednesday and Thursday (China will be closed Wed 1st through Tue 7th). The China concerns hit Aussie to 7M lows as the A$ hit — Banks and Miners led the slide. In Europe, eurozone confidence weakened in September ahead of PMI readings this week — this has EuroStoxx off 80bp, but volumes are running about 1/3 light to last week. The DAX is off 60bp, but the real concern is in Spain as the IBEX off 1.1% and Spanish 10-year government bonds fell a third day as Prime Minister Mariano Rajoy and Catalonia’s President Artur Mas clashed over the legality of the referendum for independence.
There remains sharp demand for Sov credit — with Germany’s 10YY nearing 2 week lows, and the US 10YY eyeballing downside 2.5% again. The yield on the policy-sensitive 2-year government bond remains near 3Y highs in the US, while Germany’s 2YY is resting just above September lows at a -7bp — driving gains in the $US to 4Y highs this AM, greenback’s strength has pushed the JPMorgan Emerging Markets Currency index to its lowest in 11 years. The main FX to watch overnight was the NZ$, as it has fallen victim to central bank intervention. The strength in the Greenback is a headwind for commodities, and we see weakness in the “Growth” areas, with Copper and Oil under pressure this AM. Safety buying has Gold popping a bit, helping the metal bounce 70bp off YTD lows.