Stifel Nicolaus’ Dave Lutz has a quick summary of what traders are talking about before the U.S. opening bell.
Good Morning! US Futures are slightly higher, but “feels” like (absent headlines) will be difficult for traders to get overly bullish ahead of this weekend’s Crimera vote. To that end, John Kerry is scheduled to meet his Russian counterpart in London today — as the Russian Navy ups the stress by starting exercises in the Med. One has to wonder how much risk-aversion may be due to Malaysia Airlines Flight 370 as well, as US officials acknowledge a “strengthening case of foul play.” – Many eyes are on the S&P’s March 3 “panic low” of 1834, and the 50dma at 1829 as “key” support levels. Russian markets lost 5% on the open to its lowest level since 2009 — it has lost nearly 20% in the last 3 weeks, and Russia’s 10YY is up 15bp this AM. We continue to see weakness in Europe, with EU stocks on a 5week low – the DAX is off 30bp to 5M lows after being 1% lower early — The DAX has lost 7.25% month-to-date due to the country’s close links with Eastern Europe and reliance on Russian gas imports, a huge move relative to the S&P’s 70bp decline. In Asia, the Nikkei was smacked for 3% as the Yen surged higher on the BOJ’s “tapering” and risk-aversion. Hong Kong closes it’s worst week in 2 years, and China’s markets lost 70bp as the 4 largest lenders fell sharply over the week. Emerging Markets are seeing their biggest decline since the June “Taper Tantrum,” but India continues in rally mode ahead of the elections.
The 10YY is flat, but a flight to safety has it 13bp lower for the week, and Bund Yields the lowest in 8 months. The € is recovering from the smackdown yesterday on Draghi’s dovish comments — but the Yen is testing 2 week highs against the $US right now as the “Carry Trade” unwinds. Overall the DXY is weaker, providing a tailwind for commodities – Gold is steady at a 6M high, as it has it’s longest weekly rally since 2011. Copper is bouncing 1% off the $US300 level, showing some alleviation of China Credit Stress. The Oil complex is higher, as reports that OPEC is pumping above targets sparks thoughts of a production decline. Natty gas is off 1% despite Congressional calls to open exports to alleviate Europe’s dependence on Russian Gas. Scheduled Catalysts today include PPI at 8:30, University of Michigan Confidence at 9:55, and a small POMO at 11