Dave Lutz of Stifel Nicolaus passes along what traders are chatting about this morning.
Good Morning! Futures are unchanged, after being up as much as 50bp earlier — Wind coming out as the Yen continues to gather steam on Kuroda comments saying he will adjust policy if risks from easing materialise, and the € hit as ECB’s Coeure says “the ECB is very seriously considering negative deposit rates”. Many feel S&P futures will retest the 50dma, down about 50bp from here at 1803, as we have had the strongest 4day winning streak since late 2011/early 2012 for the Indices. EU markets remain strong, with Germany up 65bp, but volume remains below trend. EU FINs having a good day as Italian 10-year yields fell to the lowest in almost eight years. The FTSE is unchanged despite dovish talk from BOE’s Carney — as the UK braces for another massive storm. Over in Asia – Japan gained 60bp, tempered by a plunge in Machine Tool Orders, but that Yen has futures marked off almost 1.5% right now. Shanghai posted a 30bp gain — we had very Strong Chinese Trade data, but questions arise about its accuracy. Doesn’t matter, as it has propelled EM Stocks to the highest in 3 weeks.
The 10YY remains higher, but was rejected from the 100dma in early trading — we have a $US24B, 10Y auction at 1. As mentioned, the DXY is flying, as the $US gains sharply against €, breaking upside of the 100dma. Many traders are focused on heavy resistance against the Yen however — at the 102.70-102.8 in the $US¥ cross. With the stronger $US, commodities have a headwind — but Industrial metals like Copper and Platinum are well bid (China data) — while WTI is popping on API data showing heavy Cushing drawdowns (DOE data at 10:30 key). Brent is barely green, however, despite the strong Chinese imports of the commodity, as EU IP came in weaker than expected – We have the OPEC monthly report at some point today. Nat gas is popping another 2% (up 17% in the last week) on the tough US weather — Catalysts today include: The Senate Debt Vote as the GOP is urging their members for a “quick vote” today ahead of weather and a 2 week break — we have scheduled Bullard speaking at 8:45, NY Fed Small Business Credit Survey at 10, ECB President Draghi Speaks and DOE Data at 10:30, a small POMO at 11, the $US24B 10Y auction at 1, and the Monthly Budget Statement for January at 2.
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