Charles Platiau
Good Morning! US Futures are starting this Friday in a happy mood, gaining over 1%, but have been coming off highs as more US Traders man their desks. While much of our upside is Yellen + the kickoff of earnings season with some Strong #s overnight (NKE, JBL - Big AAPL supplier) - The real tailwinds are coming from overseas. While the FTSE is up 1.5%, keep an eye on Glencore - was up 5% early, and has now dropped 2% on the session. The DAX is up 2.5% as Autos stage a sharp rebound, with BMW and Daimler up sharply, but VW is dropping again. Consumer, Tech, Fins and Materials are all jumping 2-3%, and there is are no major sectors in the red anywhere in Europe. Over in Asia, Shanghai Composite fell 1.6% while Aussie lost 60bp, weighed by Banks and Miners as growth concerns from China continue. Headlines that Japan has fallen back into deflation for the first time since April 2013 had the doves propelling Nikkei up almost 2% however, and despite the $ jumping overnight, it is encouraging to see most EM in the green
Yellen has yields flying higher this AM, especially short-dated ones (so Fins shud have a good day), as her hawkish commentary propels the US 2YY back over 70bp, and Fed Funds for December jumping back to almost a 50/50 chance of Dec liftoff - up from 35% y'day. With that backdrop, the Greenback is enjoying heavy tailwinds, making gains against Euro and yen, the latter propelled by dovish chatter around a Abe/Kuroda meet overnight. While most EM FX is up small, the currency to watch is that Brazilian Real - continuing With the stronger $, we have a headwind blowing for commodities - and most metals are dropping quick, led by Gold as peeps move from the yeller metal of safety. The Energy complex is mixed, with Oil holding a tentative bid into Baker Hughes data later today - while Natty continues to fall under the weight of heavy stockpiles.
We have a heavy schedule of catalysts for a Friday - Starting with 2Q GDP Final Reading and Personal Consumption at 8:30. Fed's Bullard (2016 voter) to Speak on Monetary Policy in St. Louis at 9:15, and we get Markit US Composite PMI at 9:45 ahead of U. of Mich. Sentiment at 10. At 12:30 ECB's Weidmann Holds a presser, and we get that Baker Hughes Rig Count at 1. At 1:25, Fed's George Speaks on Economy in Omaha, Nebraska, and we get the "Commitment of Traders" data from the CFTC at 3:30. Trading desks are thin in NYC, as we have Pope Francis addressing the UN General Assembly at 8:30, and later visits 9/11 Memorial and leads mass at Madison Square Garden. This, combined with shows in the city from Billy Joel, Pearl Jam, and Beyonce make today a complete disaster for commuters.