• An incredibly momentous week ahead: An indictment is almost certain to be unveiled today as part of Robert Mueller’s investigation.
• A tax bill — Republicans’ top legislative priority — will be released this week.
• The president is expected to announce his choice for chairman of the Federal Reserve, a decision Wall Street is watching closely. And, President Trump leaves for Asia, amid heightened fears of nuclear North Korea.
Driving the Flow overnight is some worries about Deleveraging in China as Bond yields there skyrocket higher. Closing levels 10 year yields +13 Bps, 5 year +16 and 3’s +1.5 Bps on close. Base metals weaker and honk Kong Stocks closed lower by .3%.The higher bond prices are having a flight to safety type reaction for US bonds. Out of Europe German CPI was released and was a little lower then consensus. Recall that individual German States release there CPI throughout the Morning so Bunds react more to this then the Actual Complete German CPI which is released later in day. In Spain A pro Unity rally so some 300K people march in support for Country to stay Whole Thus providing a bid For Spanish Stocks which are higher by 1.3%.The Dollar is lower and Euro Higher due to Spanish Worries decreasing and the very High probability that Jerome Powell will be announced as Next Fed chair as soon as Thursday. He is Dovish and the candidate to not deviate much from Yellen’s path.
Just announced Trump’s former Campaign manager Manafort was told to turn himself in to the FBI. Possibly not the last to fall? The market is focused on who will be indicted and this is weighing on “risk” After a big week of earnings we still see some top Notch names this week as well Apple and Face book at the top of the list. So Far SPX earnings have been better than expected.
US political worries, less European political worries maybe some deleveraging in China all lead to Weaker Spoos and Firmer treasuries as A Risk Of Theme is drives markets. Fed Decision on Wednesday along with Treasury refunding announcement which may see an Increase in the size of short term maturities to be auctioned.
Remember time change in Europe started yesterday.
November gas which expires today is being taken out to the wood shed as it trades down 5%.Long liquidation is the key phrase.Below is 1 minute chart of Nov gas and the last push lower has come as we approach the 1:30 expiration
10:30 update on energy
Brent above $60 for first time in 2 years as momentum carrying prices higher and higher.A couple of secondary reasons for move higher are prospect for further Oil production cuts from OPEC ,Iran refinery fire which may cause a short term hiccup in gasoil supply thus driving the gasoil crack higher by 5% today. I still beleive it is just Momentum as the general cause for higher prices.Natural gas in Full liquidation mode as November contract expires today and End of winter spread touches a new contract low,Not negative yet but approaching Zero quickly.11:00 London close may see a slow down in activity.
Rumours that trump will pick Jay powell as the next fed chair has sent dollar down Bonds,Stocks and Gold higher. Adding to the risk On environment Crude oil has taken out yesterday’s highs as momentum continues to drive prices higher.Some half baked rumors that trump will sign some big energy deal with china is also part of the move higher.
NDx +134 Goog,+7% Amzn +10%,FB +3% and apple +2%
Dovish Fed Theme driving action now
News: Big tech comes through as earnings beat across the board Amazon +$73 (7%), Goog +$34 (3%) MSFT +$3(4%) Nasdaq Futures +35 handles. Dax touched another all-time overnight, NKY closed at 22 year high and US stock Indices most likely will touch a new all-time on the cash open. Helping the risk on for stocks was The Dovish Draghi Press conference yesterday which caused the Euro to drop 1.5% from yesterday’s highs to today’s lows provides reason to buy Europe. Bunds +30 ticks as the spread between treasuries trades wider as Yield/Rate differentials favor the US helping Dollar firm as well. Dollar up another 40 ticks today and approaching the 200 d MA. Stronger dollar=weaker commodities. Copper taking it exceptionally hard as strong dollar has Pushed copper below support and Long liquidation has ensued copper -2.6%.All base and Precious metals down on day. Brent failed to trade above $60 again so Upside momentum Faltering a bit aided by talks that a cease fire has been called Between Kurds and Iraqi Government forces Brent and Cl down .5%
Treasuries have found support on yesterday’s lows as we await first look at Q3 GDP here in the US. Stocks trading risk on but treasuries hesitant until data released. Today’s Number most likely impacted by Hurricanes but nowhere near the extant of payroll data.
Will be watching for any political Rhetoric regarding Tax plan.
Catalonia situation heating up again as protestors demand Independence from Spain. The situation colled yesterday but heating gup again.
25 delta Bund skew took a tumble today as protection for a big downside move in bunds is in Demand I guess, Bunds + 100 ticks.My take is that the extreme event is now more likely to be a Down move in prices not an up move.Someone was playing that scenario wrong weren’t they?
Nobody likes the Euro today do they?