Via Dave Lutz at JonesTrading, here’s what traders are talking about before markets open on Tuesday.
Good morning! US Futures are sharply higher, with the S&P market up 1.8% and resting near overnight highs. This mirrors the strong rally overseas, which sees the DAX jumping 2.2% on strong German trade data. Sentiment is being aided by Lotta M&A: Mitsui Sumitomo to buy insurer Amlin for £3.5bn / Woodside Petroleum has made a A$11.6bn bid (US$8.1bn) for Oil Search / Betfair and Paddy Power have reached agreement on a £6 billion pound ($US9.2 billion) deal / Tesco selling South Korean stores to MBK for $US6B / Media General to Buy Meredith in Deal Valued ~$US2.4b. Over in Asia, Shanghai ripped 3% higher right into the close — everyone pointing to PBOC buying — while Aussie was up 1.7% on M&A. Nikkei whacked for 2.4% as GDP revision came in better, strengthening the Yen — While many of those Emerging Markets are in rally mode.
While Global papers note the Equity enthusiasm is due to dovish FOMC tailwinds on weaker China data — I’d point to that “policy-sensitive” 2YY which rests near 4Y highs. The DXY is under pressure — the A$ Rallying (Biz Confidence better), and the Yen is in rally mode (GDP), and Key Emerging market currencies — such as the Turkish lira and South African rand — are trying to rebound from last week’s losses. With the $US lower, we have a tailwind for commodities, and we see Oil is off 1.6% (Since Friday’s close), but rallying 2.5% from the close yesterday, along with Brent. Industrial metals are popping, with Copper up 3.5%, and Platinum and Nickel just behind. Gold remains under pressure, adding to a 4-day losing streak, while all the “Softs” are sharply higher as they await WASDE data this week.
Scheduled catalysts today include Labour Market Conditions Index Change and the Bank of Canada interest rate announcement at 10am; UK’s Chancellor George Osborne speaks at 10:30; The US Treasury is to sell $US24B in 3Ys at 1, ahead of Consumer Credit at 3pm. API data for Crude hits at 4:30, and Fed’s Kocherlakota Speaks on Monetary Policy at 5:15pm tonight. IN DC today, Congress returns from summer recess, with multiple Senators lobbying for/against the Iran deal in front of podiums. Ahead of us this week, we have China CPI, PPI – German Industrial Production – Bank of England Bank Rate Decision – DOE’s Short-term Energy Outlook – World Agricultural Supply & Demand Estimates (WASDE) – Apple event in San Francisco on Wednesday, and 25 Sellside Conferences.
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