Dave Lutz of Stifel Nicolaus has a roundup of what traders are chatting about ahead of the U.S. market open:
Good Morning! US Futures are off small, but remain off the lows of the overnight. Seems quiet out there, with Traders unwilling to take big bets ahead of PMI Services today (representing roughly 80% of our economy) — and ADP, both which will set the tone for NFP Friday. EM remains stable, with the FX basket higher against the $US, and most CDS coming off peaks quick. Some stress remains in Ukraine, where their FX is barely bouncing despite the smackdown yesterday, and their CDS remains elevated. In Europe, we are getting solid PMI data, but Germany remains under slight pressure ahead of the ECB decision tomorrow. EU Fins continue their upward trajectory, however, as Yields across the PIIGS all drop on another Greek bailout (but not “haircuts”), and PMI in Spain jumping with unemployment reversing lower, a first in 6 years. While China remained closed, Hong Kong lost 60bp, and Japan had a very “tepid” bounce despite some solid earnings reports. EM Asia was mostly higher, but Aussie lost another 50bp as the RBA’s hawkish tone weighs heavy. Globally, Financials were in favour, along with Technology — while Materials and Industrials seem the biggest weights. Some Single Stock US movers include MU +3% (Moody’s u/g), ZNGA +2% – While Losers include LVS -3.5% (Macau), INTC -1%.
The 10YY is unchanged, after failing an attempt to get upside y’days 2.63% peak. Credit folks will be watching Munis with Puerto Rico downgraded to Junk, a well expected move. Stress has come off some of the Treasury Bills maturing in March, as signs indicate the House to accept a “clean” bill raising the debt ceiling. The $US is losing ground to both Euro and Yen — and the bulls are watching the “Carry Trade” reversing most of yesterday’s gains with the $US-Yen cross struggling to stay upside 100dma this morning. With the DXY lower, we have a tailwind for commodities — and we continue to see upticks in some Industrial metals like Silver and Copper, and Gold 50bp higher as it gears to test the 100dma again. WTI is higher, not only from Inventory data, but reports of “limited” exports to Europe nearing. Nat Gas is off 1%, as investors take profits after yesterday’s pop higher, and the CME hikes margins again — a 2nd time in a week. We have a day chock full of important catalysts — starting with ADP employment at 8:15, at 10 the double whammy of our Services PMI, and the “Online Help Wanted Index”. At 10:30 we get DOE data for Crude — and 2 Fed speakers chatting on the Economy: Plosser at 12:30, and Lacker at 1:40, both among the largest “hawks” — We also have a rare Double POMO day — a small $US.85-$1.15B buy at 11, followed by a larger $US2.5-$3B buy at 2:15.
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