From Dave Lutz at JonesTrading, here’s what traders are talking about this morning:
US Futures are following global upside, with Russell Minis up 50bp as the “growth” trade continues. We will be on the lookout for mean reversion from yesterday’s ETF allocation trades (SPY > IWO / TLT > SPY / VGK > EZU – and a rebound in Energy –> XLE, IYE, XLU) unless the allocation bleeds into today. All of the global upside driven from stronger Chinese Services PMI, and headlines that Russia and Ukraine reach a “permanent ceasefire” in eastern Ukraine. The rouble is bouncing from record lows against the $US, and Micex is up 2%+. Volumes are better in Europe, with the DAX gaining 1.3% on 75% heavier volume than the last week. Over in Asia, the Nikkei gained 40bp and near Jan peaks as Abe reshuffled his cabinet – China data propels HK to biggest gain in a year — Sensex gained as the temperature in Pakistan cooled off — While Aussie finished in the red, weighed down by the Miners. Despite Rates higher, risk-embracement is lifting the EEM 1.5% early.
The 10YY in the US continues its upward climb, gaining 4bp and testing 3week highs. Bund 10YY up 4bp as well, and the EUR is gaining against the $US ahead of ECB tomorrow and the Yen still near 1Y lows into the BOJ Friday. Keep an eye on Sterling into the BOE tomorrow, we saw heavy capital flows leave London yesterday on the Scottish independence poll. Gold is staging a small bounce after yesterday’s smack, while Copper is under pressure on an investigation of the power grid in China. We are seeing Ukraine stress reversing, as Wheat and Palladium are getting hit, while Oil is catching a lift after yesterday’s smackdown. Catalyst Calendar gets thick today — Brazil PMI at 9, at 10 we get the Bank of Canada Rate Decision along with US Online Help Wanted Index and Factory Orders. We have a small POMO at 11, and the Federal Reserve Beige Book at 2. We will be getting monthly auto sales figures throughout the session ahead of API Crude data tonight.