Morning 6-28

Still feeling the Effects of yesterday’s Draghi Speech. Comments from the big banks:
– Deutsche Bank believe the comments marked “a transition from the ‘whatever it takes’ period to ‘it will take a little less’ and a potential slow turning point in the direction of travel towards tighter policy”
– Lloyds write “Draghi’s comments were interpreted as increasing the likelihood that the ECB may start to wind down its asset purchases next year.”

US Treasuries Heavy in conjunction with Bunds again. Besides the 2 comments listed above many other experts stating Draghi Speech Watershed moment, beginning of End of QE, The Turning Point for ECB .it sure looks that way after a day and half but let’s see what happens after month end/Quarter end.US yield curve steepening again for second day, Is it a change in trend or just profit taking on the flattening trade? A rare occurrence of late is 3 day consecutive days of Steeping of Yield curve if it happens so tomorrow maybe we are seeing a change in trend. Bunds -50 ticks but at one Point were down 100.The bund trade overnight was a heavy volume, large range affair. What is different today is that not all European 10 yr. yields are higher. Portugal, Spain and Italy all show yields lower and Spreads to bunds are tighter. When spreads to Bunds are tighter it usually portends a Risk On type trade which is not the case in stocks. Schatz or 2 year German Yields ae actually unchanged to lower as futures sit near session highs and thus steeping the German Yield curve. This is another difference compared to yesterday’s trade as Schatz was beating up along with Bunds today opposite reaction. Hmmm /what is having an identical reaction today is the Euro. Almost touching 1.14 handle overnight and trading higher by 35 pips. Spot Euro has not exceeded 1.14 handle in a year. Dollar down another 25 ticks and languishing near sessions lows.

European and US Stocks trying to claw back some of the overnight Lows. NASDAQ unchanged now and Spoos right up on session’s highs. NASDAQ at one point was down 60 + handles. Dax Almost 100 big ticks off lows and stoxx 50 30 ticks off lows. No top tier Economic releases today. Oil steady to lower as yesterday’s API numbers were bearish. All eyes on EIA at 9:30

Just out ECB Sources say markets misjudged Draghi Speech on Stimulus. Unwind of yesterday’s hawkish trade underway.

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