Flickr/David Baxendale
Good Morning, and Happy Friday! Over the past three months, the S&P 500 has been negative on Friday ten times and positive only twice (SentimenTrader) - and we are starting firmly in the red early. Spoos are off 30bp as European sell orders dominate the landscape. The DAX is off almost 1% and testing the 200dma right now, as Financials, Industrials and Tech is sold across the board as the EU FinMin meet on Greece (headlines read positive). Volumes are pacing average as Euros face a medley of reasons to reduce risk into the weekend: Turkey, Ukraine, China, Oil and commodities. Over in Asia, Shanghai popped small as China allowed its currency to strengthen mildly for the first time in four days - Nikkei lost 40bp but Aussie hit to a 7 month low - Miners and Energy weigh heavy down under.
The US 10YY is retracing some of yesterday's gains, and 2Y stable - but those Fed Funds have increased the odds of a September lift to 50%. Risk reduction has a bid under Euro and Yen - both testing yesterday's highs against the $ - despite EU GDP disappointing, with Greece being the only EU country to beat estimates I'm told. We still have stress Emerging Currencies - with The Turkish lira at a record low against the Greenback, as political uncertainty grows after the country's two biggest parties failed to conclude a coalition agreement, and Malaysia's ringgit lowest in 17 years, hurt by the falling oil price and a government scandal.
With the DXY taking out yesterday's lows, tailwinds are blowing for commodities, and many base metals are rally mode with Gold up 40bp as headlines roll that China's Central bank is loading up on Gold. Copper remains muted as many feel heavier Chinese stimulus needed - but that Oil complex remains a mess. Brent is struggling to hold unchanged, but that Whiting refinery outage is killing Canadian benchmarks and accelerating cushing fears, pressing WTI slightly lower from yesterday's 6Y closing low. We get US PPI at 8:30 this AM, Industrial Production at 9:15 just ahead of the U. of Mich. Sentiment at 10. The Energy complex will be focused on the Baker Hughes Rig Count at 1 - it has risen 3 straight weeks and 5 of the last 6. "Commitment of Traders" data hits at 3:30. Dead quiet in DC, with the Senate, House on August recess and President Obama on vacation in Martha's Vineyard.