What Are Traders Chatting About Right Now? Oil, Gold, And The Russians...
Good Morning! US Futures are looking to rebound this AM, led by a 30bp pop in Nasdaq and Russell. A sharp rebound in Energy and Mining shares helped the FTSE climb 1% and the DAX hit a new record (the surge in Gold/Silver yesterday occurred after the 11:30 EU/UK Close) - but weaker PPI has pressed the German market back into the red in average volumes. Over in Asia, Russia's MICEX is up small, and the Ruble showing some stability after yesterday's slaughter. Hang Seng, which lost 2% Monday as protests ramped, rebounded 1.2% - but the standout winner was China, as dovish expectations ramped the Shanghai up over 3%, led by their Fins. The 2 Central Bank announcements overnight proved as expected - India's Central Bank declined to cut rates despite their inflation at 5Y Lows - Sensex lost 40bp, while Aussie left rates unchanged, despite the China Slowdown, as they didn't want to fuel the property bubble further
The US 10YY is off small, with the curve flattening (Fin headwind) - while German Bunds reversed early weakness with yields resting at session lows after their PPI print. The DXY has regained most of yesterday's losses against Euro and Yen -causing a sharp headwind for commodities. Silver, which surged 17% off lows yesterday, is off 3% - and Gold has failed to hold $1200/oz and is off roughly 1%. Crude futures are resting on lows, with WTI off 1.6%, while the softs are all under water. Scheduled Catalysts today include ICSC-Goldman Sachs Chain Store Sales at 7:45; Fed's Fischer Speaks on a Panel at 8:10, Fed's Yellen Gives Welcoming Remarks to Students at 8:30, at 9:45 we get ISM New York, at 10 Construction Spending - at 10:30 Schaeuble speaks, and at 12 Fed's Brainard Speaks by Video on Paperwork Reduction. API data for Crude after the close tomorrow
Today I'll be looking for the reversal of 2 ETF Allocator trades from yesterday, where we had one selling MIds while rotating to Treasuries - and another leaving explosive volumes in Utes (Buying) - Discretionary (Selling) - Fins (Selling) and Tech (Selling). Watch the Oil equities, where OIH/XOP sharply underperformed the commodity yesterday (felt like a gorilla reversed out of a Long Equities, Short Commodity pair). All eyes should remain on Gold though - Yesterday at the EU Close (11:30aET) we saw Gold breaking higher while Treasuries sold off. It didn't feel like a "Inflation" or "Safety" trade, but more like a Central Bank was dumping Treasuries to buy Gold. Heavy chatter the Russians were active intervening on the Ruble, maybe the funding came from Treasuries.
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