Morning 7-28

News that is impacting markets overnight:
1. German Inflation Data for July higher than expected
2. AMZN reported disappointing earnings
Even though the Pickup in German Inflation will have a minor Impact on Overall EU Inflation the higher prints have weighed on all European 10 year yields. Sovereign Supply from Italy also weighing on prices. Yield changes in basis points overnight:
• Italy +6.7Bps
• Spain +6.1
• France +5
• Germany +4.5
30 year yields from the European majors all up between 4-5 Bps. Germany, Similar to US see her Yield Curve steepen overnight. The Inflation metrics have provided a reason to buy the Euro as it trades higher by 50 Pips and looks to take out yesterday’s highs of 1.1777 .The weakness in European Debt =weakness in treasuries a Pattern we know well. I am watching 30 year yields as they are once again flirting with resistance of 2.95.A topic for another day but the continued widening of the spread between 5 and 30 year yields can be blamed somewhat on posturing for upcoming 30 year supply and possibility that fed is on hold for a while in regards to rate hikes and the Rundown of balance sheet will be main Policy tool.
Amazon collapsed yesterday afternoon as it now appears someone had a good idea on what her earnings were going to look like. Amazon dropped an additional 3% after the NDX cash Close taking the nominal drop in prices yesterday’s roughly $80.Actually EPS was a big Disappointment For AMZN.Weak AMZN=Weak tech. European stocks Lower,France and Portugal -1% Dax -.5%. Spoos -7 handles and Nasdaq -40.Gold steady as We await US GDP to set tone for morning.
This morning we do get first look at GDP for Q2 and preliminary Michigan Confidence. I am hoping for something Dollar positive.
Obamacare Lives for another day as 3 Republican senators voted against a skinny Bill. Tax Policy will be front and center now as the healthcare debate will move to back burner. Congress gone for 5 week recess.

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