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Via Dave Lutz at JonesTrading, here’s a super quick guide to what traders are talking about right now.
Good Morning, US Futures are slightly higher, in a rally that I describe as being “tentative at best – dead cat at worst (4times in overnight Eminis lost 12-16points in single ticks – some big gorilla moving chess pieces around). Huge move in China’s offshore currency overnight has spooked markets a bit – their offshore yuan jumped by the most on record (options expiry?) – but immediately impacted Euro futures – It’s a sea of red over in Europe, with the DAX off 50bp in decent turnover, as a sharp drop in Materials and Tech issues weigh. Euro Stoxx is down 90bp, as yield plays drop sharply, led by a 2% drop in utilities. Over in Asia, Shanghai lost 1.5% and Hong Kong lost 2.8% as Chinese CPI comes in higher, but weaker PPI continues slowdown concerns – The Nikkei retreated 2.5% after yesterday’s 7.7% surge, and Aussie lost 2.4% as banks give back all of yesterday’s gains. Overnight, Brazil was cut to Junk – EWZ is off 7%, and coupled with its 6% weighting in EEM and a sea of red in those EM Asia Markets, one would expect it to be lower, but like yesterday – it’s opening with a slight bid.
Overnight Papers read “Volatility rules in equity markets amid continued uncertainty over China’s economy and US monetary policy” – and while Fed Funds remain at a 28% chance of liftoff – those US 2-year yields are steady at 74bp, near highest in 4years. The 10YY is bouncing small as issuance continues ($27.5B priced yesterday in IG, 2nd biggest day of 2015) – but it remains well below yesterday’s peaks into the 30Y auction later today. The DXY is higher, with the $ making gains against Euro, and Yen – while the Kiwis cut rates and hinted at more to come, knocking the NZ$ near 6year lows. The Commodity complex is shrugging off the higher $, with Copper up nearly 1% and gold right behind, while the Oil complex is bouncing 1% from yesterday’s smackdown despite API inventories showing a massive build of 2.1M barrels.
Ahead of us today, we have Weekly Jobless Claims and the Import Price Index at 8:30 – Wholesale Inventories at 10 – Natty gas Inventory data at 10:30, ahead of the DOE data at 11. The US Treasury is selling $13B in 30’s at 1. In Washington today, at 9 there is a Senate Climate Action Task Force discussion on EPA’s clean power plan, at 11:15 Agriculture Sec. Tom Vilsack is announcing states that will get stake in renewable fuel initiative. At some point we could have a committee vote on US Oil Export legislation, ahead of it being introduced to the full house later this month.