JonesTrading’s Dave Lutz has a roundup of what traders are chatting about right now:
Good Morning! Us futures are starting weaker this Am, led by a 80bp drop in the Russell. The Selloff accelerated this AM when deflationary German CPI data got a bid under Bunds, driving flows from Equities. The DAX is off 1.5% in decent volume, trading 30% heavier than normal. The EU banks are under decent selling pressure again, led by a 3% drop in Spanish Fins. Slowdown concerns are weighing on Industrials and Material issues in Germany as well. Over in Asia, the MICEX has given up pre-morning gains, despite a massive squeeze in the Ruble on reports a Gas deal will be signed. The Nikkei gained 70bp as the Yen fell, While Shanghai gained 80bp as more vauge reports of stimulus circulate. Hang Seng was under pressure on the surging HK$ (Tied to USD) — While consumer and Fins propelled Aussie in the green, despite pressure in the Miners. We continue to focus on Emerging Markets – Watch EWZ and PBR as Brazil raises rates overnight, Brazil is 10% of the EEM.
The US 10YY is off a few bp, mirroring the drop in German 10’s as the Euros chase yield. Yellen is due to speak at 9amET although shouldn’t address policy (giving remarks on Diversity). The $US is gaining against both Euro and Yen, the latter getting upside Y109 as we await the BOJ’s anticipated downgrade of their economy tonight. The $US’s Focus is on US GDP at 8:30ET. Street at 3%, but peeps have been ramping higher of late — The top 5 forecasters on Bloomberg are all above 3% – as high as 3.5% – With the stronger $US, commodities have a headwind. We are seeing a sharp drop in Metals, with Silver breaking down 2.6% and Gold off 1.8% and nearing a $US1200 test as Indian imports collapse and Inflation vanishes (Citi Cuts Global Inflation Outlook by Most in 5 Years, German CPI comes in at -30bp m/m, and US breakevens drop. The Oil complex is under pressure this AM, as OPEC Secretary General sees no reason for panic on prices, and reports mount US shale is profitable at $US70. Continue to see the cover happening in the Grains and Beans — While Natty Gas continues to see a short-cover into a cold weekend in the Northeast. Scheduled Catalysts today include GDP and Weekly Claims Data at 8:30, Yellen speaks at 9, we have a $US29B 7Y auction at 1, and at 2:15 ECB’s Linde Speaks in Madrid — while Pre-Opening Earnings include ABC, APD, APO, FIG, HAR, IVZ, K, MA, MGM, OAK, and TWC while CCI, GPRO, LNKD, MCHP, NEM, ONNN, SBUX, and WU come after the close.
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