Good Morning! US Futures are under pressure, led by a 60bp drop in the Russell - but we are outperforming markets in Europe, where the DAX and EuroStoxx are off 1.4% in fair volume. Weakness being driven by several factors: Banks weak as Regulators hit them with $3.2bn of fines related to forex trading / German Panel of Eco Advisors were bearish on recovery / NATO saying convoy of Russian Tanks entered Ukraine. Transitioning into Asia - While the MICEX is unchanged, the Ruble is getting whacked again. Shanghai added 1% led by brokers on anticipation of the HK Link starting next week, while Japan hits 7Y highs on hopes Abe will postpone a looming tax increase and shore up support for economic reforms with snap elections. The worst market was down under - Aussie was hit for 1%, with heavy losses in the mining sector (Despite Ore unch), and 3 of the 4 big banks trading ex-divvy.
The US 10YY has retreated back below 2.35% as German Yields tested 80bp overnight as the Euros fret negative headlines. The DXY has regained its footing, but mostly against Euro as $/Y off small, nearing a Y115 test. This headwind for commodities is not helping Oil - With both Brent and WTI nearing off 90bp as Libya's Sharara field has resumed production. Metals are mixed, with Copper showing some life, up small - while Gold and Silver are both red - Gold nearing a $1160 test as BOE slashes inflation estimates. We are seeing a continuance of covering in the Grains and Beans, with Wheat jumping 1.5% (Ukraine Headlines helping), and Corn climbing 90bp. Scheduled Catalysts today include MBA Mortgage Apps, Draghi will be speaking at Rome University at 9am (not policy), Wholesale Inventories at 10 ($/Yields) - Fed's Kocherlakota Speaks at 12, and 1pm brings the $24B, 10Y auction. API data for Crude hits after the bell, ahead of DOE tomorrow. CSCO, JCP and NTAP report tonight
Some trades I am watching today - Big Bank deal on the tape, with BBT taking SUSQ for $2.5B - Regionals may outperform the money centers on headlines / ITB (Builders) had a nice move thru 6M resistance, if it continues, Momentum plyers will follow / REITS outperforming again - Japan's Property Index climbed 3%, while UK REITS are around unch despite FTSE weakness / Gold Miners (GDX/GDXJ) as a massive short covered yesterday, dislocating higher / A reversal lower in the dollar should be very commodity supportive, as we saw late yesterday - especially in the crowded shorts (Corn). Finally, Congress reconvenes, and Keystone is on the front of the agenda in an effort by Senate Dems to save Mary Landrieu's seat - TRP, COS, CVE, CNQ benefit - While the US rails are the primary losers