(From Mizuho)

A technically “failed” 30-year bond auction in Germany today (not unusual in Germany, happens several times a year). Germany sold the 30-year zero-coupon bond at a record-low yield of -0.11%, but demand of €0.869bn was way below €2bn target. The official bid/cover was 1.05, implying that the Bundesbank retained ~58% of the issue. Using a cross-currency basis swap (lend dollars, receive euros), a US buyer can get around a 2.60% yield on the German 30-year bond, versus a 2.061% yield on the US 30-year bond. And of course you get long duration ahead of the expected restart of ECB quantitative easing.

 Asian Stocks Mixed  overnight, 2:00 A.M. European Cash Open  Buyers out in full force AS all European Bourse higher Italt’s MIB +1.88% less political worries  France Cac +1.5% as  merger talks resume between Renault and Fiat, Auto sector +1.7% Dax +1.2%  . Spoos and Nasdaq  +.8%, RISK ON. Throw in a bit of Central bank/Fiscal stimulus expectations and you have everyone in love with stocks again. Target earnings better than expected stock expected to open at record highs. That ugly Buxl auction weighing a bit on Bunds -36 ticks and Buxl -130 ,Treasuries a bit heavy Gold following the Risk On Playbook trading lower. Dollar sideways to lower and similar to yesterday the JPY correlated with dollar also trading a touch lower. Markets awaiting FOMC minutes for any Dovish Clues, if not seen Traders may ignore and label it Old News and refocus on Powell speech Friday morning. I have not seen an early release time for Powell’s text, but I am on the lookout. Oil small bid as the API reported a draw in Crude oil stocks and copper little changed.

U.S. calendar light  tdat FOMC minutes at 1:00  Candian CPI surprised to upside this will make it difficult for Central bank  to Join the  “everyone cutting rates” Club

News of Note:

• A U.S. MILITARY MQ-9 DRONE WAS SHOT DOWN OVER YEMEN ON TUESDAY: TWO U.S. OFFICIALS TELL REUTERS
• IRANIAN PRESIDENT SAYS IF IRAN’S OIL EXPORTS ARE BROUGHT DOWN TO ZERO THEN INTERNATIONAL WATERWAYS WILL NOT HAVE THE SAME SECURITY AS BEFORE
• CHINA THREATENS SANCTIONS OVER U.S ARMS SALES TO TAIWAN – DPA
• CHINA THREATENS SANCTIONS OVER U.S ARMS SALES TO TAIWAN – DPA
• FED’S KASHKARI SAYS WILL ARGUE FED SHOULD CUT THE FEDERAL FUNDS RATE – FT OP-ED
• ED’S KASHKARI SAYS “WE SHOULD ALSO USE FORWARD GUIDANCE TO PROVIDE EVEN MORE OF A BOOST TO THE ECONOMY THAN A RATE CUT ALONE CAN DELIVER”- FT OP-ED