Thomson Reuters
Good Morning! Feels like a cautious bid out there evaporating as more traders man terminals in Chicago and realize they didn't win Powerball (3 Winners - Chino Hills, CA / Florida and Tennessee). Russell and Transports in Bear Territory (-20%+) - S&P hits 10% down from peaks. August Crash lows coming into play as Options Expiry Gamma Rehedging has been playing a major role into tomorrow. It is interesting that US Futures remain flat, cycling between the 1875-1885 strikes despite sharp weakness over in Europe as headlines say the "ECB is wary of further action". Germany is off 2.6% in almost 2x normal volume - with every major group sharply hit. The Autos are getting crushed on headlines of Renault Emissions probe and where European exchanges fall to near three-month lows, the FTSE hits a three-year low - Energy, Miners and that collapsing pound). In Asia, we had Terror headlines overnight (Jakarta and Turkey) - but the market's attention was on the PBOC keeping the renminbi fix steady for a fifth session in "an apparent effort to calm markets." - China was the only exchange in the green - Japan lost 2.5% despite the Yen holding steady - Aussie lost 1.6% as energy stocks led to the downside, and every Emerging Market was in the red.
Haven trades continues, with the 10YY off 3bp (watch yesterday's lows 2.04% - a break makes 2% a magnet) - and Gold up 40bp. The DXY is under some pressure, with Euro continuing it's bounce off the 50dma on ECB headers - while $/Yen remains bid. Maybe peeps thinking about Competitive FX action from the BOJ and unwinding that long Yen position (1st time in 3 years this week). Renminbi down 11% against Yen in last 6 months - 4% of which has happened in the last 2 weeks. The Commodity complex is relatively quiet, as Expiry pushes Brent 1.7% higher, but keep an eye on Natty Gas into Inventory data today - The commodity has well outperformed other Energy plays YTD, and is sliding off 2% in the early go.
The BoE just kept rates steady (expected), and now we await the ECB Minutes at 7:30. At 8:30 Fed's Bullard Speaks to Economic Club of Memphis, right when wee get a dump of Economic data: Weekly Jobless Claims, Import Price Index, and Philly Manufacturing data. At 10:30 we get that Natty gas Inventory data, just before the 30Y Auction at 1pm. Quiet down in Washington as the House and Senate Republicans continue 3-day strategy retreat in Baltimore ahead of the debate. Tonight we get #s from INTC - TSM overseas posted a decent Q and guidance. Watch how the street handles JPM #s (off 13% YTD) as a proxy for how it treats #s from - BLK, C, PNC, RF, USB, and WFC tomorrow AM. Biotech should remain a focus with the massive drawdown occurring - XBI is off 23% YTD.