Dave Lutz of Stifel, Nicolaus passes along the top topics about which he is chatting with clients this morning.
As he puts it, there is a "bit of a bloodbath" in global markets today.
Morning, a bit of a bloodbath in Global markets, but US futures have recovered from their lows thus far – Like yesterday, the SPX Futures are outperforming Japan and Europe – Losing only 30bp, but trading under the 50dma – a first since April. DAX is off 1.5% (Was off 2.5%), while EU fins are outperforming (off 70bp) – despite Greek and other Yields widening quickly. In Asia, Focus on the Nikkei smacked for over 6%, taking the index to levels not seen before the BOJ launched its stimulus program on April 3 – China lost “only” 3% after a 3 day holiday closure – The Kospi was hit for another 1.5% (Samsung hit again, now off 13% this month) – and flows continued from EM Asia, with Indonesia, Philippines off sharply again.
Many yields globally are lower, with Japan’s 10YY off 2bp, and US 10YY under 2.2% after testing week lows earlier this AM. Yields in the PIIGS, however, still leaking wider to Bunds – With Greece out 15bp further on Political unrest – Greek yields have leapt almost 2% against Bunds in the last month.. The USDJPY got under 94 overnight, a massive move that sparked the de-leveraging in Japan – With that, the DXY remains quite weak, lost 5% in 2 weeks, and resting on 4M lows (overdone?) – We had FX Intervention last night from Indonesia, Brazil, India to stem the EM outflows. Despite the DXY Tailwind – Most commodities are under pressure, especially Industrial – as World Bank cuts it’s growth forecasts, and Carry Deleveraging impacting asset classes globally.
Not least of the restraints on Abe in outlining his plans for widespread deregulation to stimulate investment and business growth is the July 21 elections for the upper house of parliament - The LDP is expected to overturn the majority in the House of Councillors now held by the opposition Democratic Party of Japan - But Abe needs a convincing win to give him the political clout to push through some of the more contentious and divisive elements in his structural reform program.
For more on today's market action, see here -->
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