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Tuesday, December 16, 2014

What Are Traders Chatting About Right Now? Stress In The FX Markets... (DIA, SPY, SPX, QQQ)

JonesTrading's Dave Lutz has what traders are buzzing about right now. Morning!  US futures are dropping quickly, with S&P off 50bp and 1% off overnight highs.   Lotta FX stress out there, with the Ruble not supported by the 6.5% HIKE in rates overnight.  The Ruble has plunged 8% against the Dollar in early trade as Oil falls another 4%.  The Ruble has lost 18% against the Dollar this week alone – sparking massive growth fears with one of Europe’s largest trading partners.   The DAX is off 50bp, held back by a 1% drop in their Financials as all of the PIIGs yields break wider (despite Greek Syriza poll lead narrows).   Gulf markets tumble about 8% as Brent slides below $60 (Dubai lost 7.7%, Abu Dhabi lost 5%, Qatar's bourse fell 3.6%, Kuwait lost 2.4 % and Oman was down 2%.  Saudi lost 3.9%, lowest in 1 year).  The Nikkei was hit for 2% as the Yen broke to 4week highs, but Shanghai leapt 2% to the highest close since 2011 on dovish hopes.   India was smacked for 2% and Aussie 60bp with the miners continuing their drop as MS takes down Ore price projections. The Flight for safety amidst the Oil/Russia slowdown fears has driven Bund yields to 57bp, new record lows, and US 10YY is gapping down towards a 2% test.  “Flattener” trades abound, with the 3M5Y curve down 13bp, a big headwind for Financials.   The DXY is off as players seem to be leverage everywhere - so the crowded Euro short gets covered, and the crowded $ long liquidates - German 5Y Inflation metrics are collapsing as German, EU and Chinese PMIs all came in light – their 5Y breakeven at a -17bp!.  Despite the drop in Inflation expectations, Safety buying has propelled Gold 2% higher, spiking over 1220/oz.   Platinum is up 1% (Russia Supplier).   The story is about Oil, which has dropped another 4% overnight, to under $54/barrel earlier.   Front month Brent under $60 into Expiry today.  Scheduled Catalysts today include Housing Starts and Permits at 8:30 and Markit US Manufacturing PMI at 9:45.   API data for Crude after the closeSEE ALSO: 10 Things You Need To Know Before The Opening Bell Join the conversation about this story »


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