Global financial markets are getting rocked. And everyone’s blaming the financial markets.
Dave Lutz of Stifel Nicolaus has a roundup of what traders are chatting about ahead of the U.S. market open:
Good Morning! Stress abounds this Friday Morning from FX and EM again for a multitude of reasons. EM continues under pressure on Argentina’s FX getting devalued, sparking fears of other countries following suit as the FX players challenge them. The other main headline is in China, where the ICBC Chair said no compensation to holders of a $US500mln busted trust, sparking fears of a “Broken Credit System” in China —> While the Argentine Peso has stabilised after being whacked for 12% yesterday – Turkey’s Lira hit again, South Africa’s Rand a fresh 5Y Low, Russia’s Ruble nearing a record low, and Comments by RBA board member Heather Ridout send Aussie dollar tumbling to a 3 ½ year low. This has emerging markets extending the worst start to a year since 2009.
E-Minis are off 80bp right now and resting on the 50dma — where it bounced from 2x a month ago. EU Markets in the red across the board, as investors take profits in EU debt, driving their banks off 2.5% and smacking Spain for over 3% (Unemployment #s from yesterday still weigh) – Globally, Financials are getting whacked in EU, Japan, India, China and Aussie. The DAX is off 1.4% right now, and trading is heavy in the Euro-Zone, with markets trading 60% above normal averages. In Asia, the reversal of the “Carry Trade” continues to propel the Yen higher, hitting the Nikkei for 2% (Nikkei Futures are marked another 2% lower right now). China was a standout, gaining 60bp in heavy trading and popping to 3 week high as Money Market rates fell again. Single Stock Movers in the US include JNPR +5% (Jana stake, u/g at Barc); MSFT +3% (#s); SPUX +1% (#s). Losers include IGT -10% (#s); TSLA -2% (China Pricing); and Multiple Materials stocks.
Yields in the USA are in collapse, with the 10YY testing the 2.7% level this AM, down 17bp from Wednesday’s close, and the 30YY off 14bp from then. The $US continues it’s downward trajectory against the €, with the € nearing the highest level against the Greenback since 2011. The USDJPY Cross has broken downside of the 50dma for the first time since November as traders unwind the “Carry Trade”. With the DXY failing the 50/100dmas this week, we have a tailwind for commodities. Precious metals have a bid, interesting Silver outperforming Gold, but the Yellow metal is hitting 2 month highs, and approaching a 100dma test. Natural Gas is squeezing higher again, gaining 5% overnight as another cold spell draws down stocks — Nat Gas has gained 17% over the last week, and hitting the highest level since 2011. Both brent and WTI are in the red — but WTI continues to outperform on the plunging dollar — it’s discount now the narrowest in 2 months. There is no major Economic data today — but we do have the largest POMO of the week at 11am.