Stifel Nicolaus’ Dave Lutz has a quick summary of what traders are talking about right now.
Good Morning! US Futures are under pressure, and rest on the lows of the overnight, off 30bp. This mirrors weakness in overseas markets, with the DAX off 1.5% in very heavy volume, as China rebalancing, Russian Trade Stress, a soaring €, and EM instability weigh heavy. The EU fins are off 1.4%, still outperforming the broader market since the ECB unveiled the “Stress Test” plans. Stress is jumping in the Ukraine again as the interim PM visits the White House, with their CDS up 20%, and nearing 2014 peaks — and Russia’s Equity market threatens to take out 1Y+ lows. Traders are also keeping an eye on Turkey, where renewed protests ahead of their elections has sent Yields jumping toward 4Y highs, and the Turkey Equity ETF threatening 5Y lows. It was bloody in Asia, where the Nikkei lost 2.5%, South Korea 1.6% and Hang Seng 1.7%. Shanghai lost small, but Chinese shares in Hong Kong are approaching a bear market as the Yuan slides. Miners were whacked again on the open in Aussie, before staging a big short-cover rally to close near unchanged. Sector Focus in the States will be on the Homebuilders (CS downgrade, ITB near key support), the Alt-Energy Space (PLUG taking out y’days lows), Materials (Huge bets yesterday Gold Mining ETFs), Retailers ahead of Sales Data tomorrow, and Financials with C kicking off a Asset Management Conference.
The 10YY is lower, breaking below the 100dma for the first time this week. The DXY is basically unchanged, caught between a surging Yen (Risk Aversion) and a falling €. Gold is trading at the highest level since September — but metals focus remains on Copper as it was limit down in Shanghai, as collateral trades unwind, before recovering slightly. I read that on the Shanghai exchange 5.5mm tons of copper traded this AM, which is 25x its normal average, and equivalent to the annual production of Chile. The Energy complex is all red, with WTI breaking south of 200dma and $US100 level as API showed a nice build in Crude Stocks. Brent is outperforming as Libyan and Syrian Stress continue to buoy the benchmark. We have a Very Light catalyst calendar today — we have DOE data fro Crude at 10:30, the week’s smallest POMO at 11, a $US21B 10Y auction at 1, and Treasury’s Monthly Budget Statement at 2pm. There will be heavy focus on Chinese Retail Sales and Industrial Production data overnight tonight.