JonesTrading’s Dave Lutz has what traders are chatting about right now:
Good Morning! No surprise, but Light volume abounds, with Germany, Italy, and France (1/2day) all closed – UK financial markets close in a few minutes, and their volumes are running 70% light as the FTSE gains 20bp, led by Defensive names. Over in Asia, Russia’s MICEX is up 60bp, and the Rouble holding steady despite S&P warning yesterday — The Nikkei gained 1.2% after their 3day weekend, but the Shanghai was hit again for 1.9% led by Brokers and Banks (Chatter has some brokers raising margin requirements as the government tries to cool off the recent rally). The Aussie Market gained, despite the price of Ore plunging overnight to fresh 5Y lows (China Analyst Comments), as the Miners managed to close higher on chatter of project cancellations.
Treasuries are not recovering yesterday’s losses, which accelerated after the 5Y auction demand came in light – (7Y today). Bunds are not losing much of their bid, still yielding under 60bp as demand for safety continues from Europe. The DXY is weaker, surrendering some of yesterday’s gains against Euro and Yen — a Tailwind for commodities. That said, Oil is dropping fast right now, as last night API showed a build of 5mln, expectations were for a draw. We have DOE Inventories today — Expectations for a 1.8 million drawdown (WSJ). Natty is off small into Inventory data later (pulled forward from tomorrow), while Gold remains under slight pressure – GLD had the biggest drawdown in 18months yesterday. Scheduled Catalysts today include Weekly Jobless Claims at 8:30, DOE data for Crude at 10:30, Natty Gas Inventory Data at 12, Auction of 7Y notes at 1. US and Canadian Equity closes at 1pmET, US Credit at 2pmET.