Here's A Quick Guide To What Traders Are Chatting About Right Now

JonesTrading’s Dave Lutz has what traders are talking about right now:

Good Morning! Global equities reversed hard around 5am when EU inflation (5Y lows) and results from a sloppy Spanish auction were published — Right now US futures are off sharply, NDX losing 1.6% as EBAY and NFLX implode — NDX futures are taking out yesterday’s lows, while S&P is testing — Of note, smallcaps are outperforming slightly again. We’ve already had 450k S&P futures trading this morning, double yesterday’s run rate at this time (and yesterday was a record volume day) – US bank stocks suffered their worst one-day fall in almost two years- a good deal of that pain in the banks as the 3M/5Y yield curve continues to flatten, and it’s flattening sharply again this AM. Over in Europe, the DAX is off 1.8% in double normal volume — so maybe starting to see Euro capitulation taking hold — while PIIGS markets under sharp pressure again, Spain and Italy off 3% – while Greece is slightly outperforming. Over in Asia, Tokyo’s Nikkei lost 2.28% as the Yen continues its upward climb, while Shanghai retreated 70bp despite upbeat Chinese bank lending data. Aussie was the only major global market in the green, propelled by a late day rally in their banks.

The US 10YY is falling under 2% again, off 13bp as Europeans and Asian grasp for paper, and smaller budget deficits in the US reduce supply at Auctions. We will look for a turnaround in yields again when European Credit markets close near 12pmET. HY staged an impressive rally in heavy volume yesterday — HY23 down 50c on the week only. I hear Mortgage Bonds have been doing very well. 5Y Breakevens took on the infamous “Waterfall Pattern” yesterday, as inflation expectations collapsed – Greece out 1% to bunds. Another crowded trade getting hit. The market is hunting out crowded trades and making people PAY – Commodities are under sharp pressure again, with WTI falling 2%+, setting off stops as it breaks $US80 to the downside, while Brent falls to another 4Y+ low into contract expiry – . Industrial metals like Copper are under pressure as well, Copper off 1.5%. Gold is in the red as well, sparked by profit-taking to meet margin calls elsewhere.

Scheduled Catalysts today include Fed’s Plosser speaking on the Economic Outlook at 8am, Weekly Jobless Claims at 8:30 – Fed’s Lockhart to Speak at 9, Industrial Production at 9:15 — at 10 we get Philadelphia Fed, NAHB Housing Market Index, and Fed’s Kocherlakota speaking on Monetary Policy. There is a very small POMO scheduled for 11, and Fed’s Bullard Speaks on U.S. Demographics at 1. Notable Earnings today — BAX, BBT, BHI, BX, DAL, DHR, GS, TSM, (pre-market); AMD, GOOG, QLGC, SLB, SNDK, XLNX (post market). AAPL is also holding a rollout of its new iPad line today.

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