JonesTrading’s Dave Lutz has what traders are chatting about right now.
Good Morning! US Futures are jumping nearly 1% following strong European market action – More hopes that Crude is in a bottoming process helping sentiment, Very Dovish Evans comments overnight (No hikes till ’16 – voter), Ukraine Credit Guarantees from Germany, and ECB QE hopes all factors in the move higher. The DAX and FTSE are up just under 2%, in slightly heavier volume, led by a 2% pop in Materials stocks. While Greek yields are in 20bp on the soothing Merkel comments yesterday, Athens can’t hold a bid, despite dropping 20% in the last month. Over in Asia, cooling tensions over Ukraine and Oil stability (for now) have Russia up 4.5%, and the Ruble remains bid to the $US. A Falling yen helped Tokyo rally 1.7%, and Sammy guidance helped the KOSPI climb over 1%. Taiwan surged the most in 4months on headlines that regulators are considering allowing Chinese tourists to open stock trading accounts in Taiwan by the third quarter. We did have heavy profit-taking in China, with Shanghai off 2.4%, but despite a pullback in Ore from 1M highs, Aussie had a good day, led by a pop in the Miners.
The US 10YY keeps knocking on 2%, but thus far no sustained move above. German Yields are basically unchanged and 5Y “breakevens” (bund market inflation expectation) are resting near record lows as deflation headlines hit Europe’s papers. The $US is continuing yesterday’s strength, gaining sharply against Euro and Yen — the $US/Y Carry rests just under 120 — key to watch. The $US rally a major headwind for commodities, notably Gold which is nearing another $US1200 test today. WTI and Brent are both holding steady again — but no bid for Natty Gas despite freezing weather, off another 1.5% into Inventory Data today — we are seeing a clear divergence between Natty and Oil covering.
Scheduled Catalysts today include Challenger Job Data at 7:30, Weekly Claims data at 8:30; The Senate starts talking Keystone at 10, and at 10:30 we get Natty Inventories — then watch for headlines from Fed’s Rosengren at Noon. Obama will be speaking on lowering FHA premiums at 12:45 — Housing stocks were strong yesterday on these headlines. At 3pm Consumer Credit data is released, and Fed’s Kocherlakota speaks tonight at 8.