JonesTrading’s Dave Lutz has what traders are buzzing about right now.
Morning! US futures are dropping quickly, with S&P off 50bp and 1% off overnight highs. Lotta FX stress out there, with the Ruble not supported by the 6.5% HIKE in rates overnight. The Ruble has plunged 8% against the Dollar in early trade as Oil falls another 4%. The Ruble has lost 18% against the Dollar this week alone — sparking massive growth fears with one of Europe’s largest trading partners. The DAX is off 50bp, held back by a 1% drop in their Financials as all of the PIIGs yields break wider (despite Greek Syriza poll lead narrows). Gulf markets tumble about 8% as Brent slides below $US60 (Dubai lost 7.7%, Abu Dhabi lost 5%, Qatar’s bourse fell 3.6%, Kuwait lost 2.4 % and Oman was down 2%. Saudi lost 3.9%, lowest in 1 year). The Nikkei was hit for 2% as the Yen broke to 4week highs, but Shanghai leapt 2% to the highest close since 2011 on dovish hopes. India was smacked for 2% and Aussie 60bp with the miners continuing their drop as MS takes down Ore price projections.
The Flight for safety amidst the Oil/Russia slowdown fears has driven Bund yields to 57bp, new record lows, and US 10YY is gapping down towards a 2% test. “Flattener” trades abound, with the 3M5Y curve down 13bp, a big headwind for Financials. The DXY is off as players seem to be leverage everywhere – so the crowded Euro short gets covered, and the crowded $US long liquidates – German 5Y Inflation metrics are collapsing as German, EU and Chinese PMIs all came in light — their 5Y breakeven at a -17bp!. Despite the drop in Inflation expectations, Safety buying has propelled Gold 2% higher, spiking over 1220/oz. Platinum is up 1% (Russia Supplier). The story is about Oil, which has dropped another 4% overnight, to under $US54/barrel earlier. Front month Brent under $US60 into Expiry today. Scheduled Catalysts today include Housing Starts and Permits at 8:30 and Markit US Manufacturing PMI at 9:45. API data for Crude after the close
Business Insider Emails & Alerts
Site highlights each day to your inbox.