JonesTrading’s Dave Lutz has what traders are chatting about right now.
Good Morning! US Futures are weaker, led by a 25bp drop in the Russell, following lower European Markets as Grexit fears mount and Oil takes out lows as MS and Citi have very bearish reports out. The DAX is off 60bp in decent volumes, while Greece is hit for 4% as Polls showing Syriza holding a lead. PIIGs debt is wider, that has Fins underperforming, while Consumer and Energy names remain under pressure. Despite the drop in Oil prices, Russia’s MICEX is up 2%, and Ruble holding gains as not inflammatory headlines hit of late. Over in Asia, China jumps 3.6% as property and Energy shares ripped in anticipation of further stimulus and reform. The Nikkei lost 20bp in light volumes, while Aussie gained small despite the Miners closing Mixed.
The US 10YY is unch, catching more of a bid as traders man their seats and eyeball the action in Oil — Gundlach had a interview last week talking fresh record low yields (10YY 1.38%) if Oil drops into the low $US40’s. The Euro is on 9year Lows against the $US, ahead of Wednesday headlines possibly showing the first deflationary CPI print in the EU since 2009. The Energy complex is mixed, with Natty up 4%, popping from 2+Y lows as Cold Weather is expected, but there are a few factors weighing on Oil to start the week — Dollar getting stronger, Euro Growth fears on Grexit, and I’m reading 2 very bearish notes out this AM — One from Citi dropping WTI target to $US55, and one from MS talking increasing output. WTI off 3% and nearing $US51. With no major US data out today (nothing against ISM NY at 9:45), focus shifts to U.S. ISM on Tuesday, December ADP on Wednesday, initial jobless claims on Thursday and the closely watched December nonfarm payroll on Friday. We will be seeing headlines from the Consumer Electronics Show in Vegas building throughout the week as well — always fun reads.