Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

News & Views: Friday, October 3

By

What you need to know for today's trading day.

PrintPRINT
This article contains three of Jeff Cooper's posts on the Buzz & Banter, where subscribers can follow over 30 professional traders as they share their ideas in real time.

China Won't Bail Out Local Governments (WSJ)

Traders Wipe $1 Trillion From Default Swaps Before Overhaul (Bloomberg)

JPMorgan hack exposed data of 83 million, among biggest breaches in history (Reuters)

Exclusive: Facebook plots first steps into healthcare (Reuters)

Hong Kong Protesters Attacked at Pro-Democracy Protests (Bloomberg)

Views
German markets are closed today for "National Day." Hong Kong reopened and moderate gains were seen in the Hang Seng (HSI) overnight, which is more than was priced in by the US-denominated ETF FXI. Mainland Chinese markets remain closed for a third day.

Protests in Hong Kong seem to be dieing down, or as was feared, local citizens (probably with help from the Chinese irregular army) are attemping to force the protestors out of their encampments in different parts of the city and Kowloon. Many were afraid that when the country's holidays were over that the disruption to daily life and economic activity would become a greater problem than the elections that are three years away. That diminishes, at least for now, one of the main geopolitical risks.

European credit indices - SNRFIN, SUBFIN, MAIN, XOVER - are showing the largest positive risk-adjusted return overnight across all assets and are outpacing the gains seen in their local equities. Keep in mind that European credit has performed far worse than equities lately, so there is more ground to be made up there if the pain in stocks does not continue. However, peripheral European bonds are worse in outright yield terms, and slightly tighter against Germany. German Bunds and UK Gilts are catching up to post-European close weakness in US Treasuries yesterday.

Also note that the US dollar is showing the largest positive risk-adjusted return in currencies overnight. That is due to three reasons. The Japanese MOTHERS index - a gauge of local risk sentiment - is the best outright and risk-adjusted performer across equity indices. This is a catalyst for the Yen weakness following almost $2 of strength in a two day period. In Europe, investors are looking past the momentary shortfall in expectations from the ECB to continue selling the EUR. Yesterday did not change the fact that the ECB will remain on hold until 2019. This price action is a very important delineation that investors are more concerned about the long-term trend than any short-term wiggles. Lastly, the GBPUSD is showing the worst performance in currencies overnight. The latest UK services PMI showed a significant deterioration from the prior month

Heading into today's government payrolls number, I think sentiment is very high that we will receive a less-than-expected print, which is why we have seen a continued pressure on equities and strength in Treasuries. Thus, if we see a poor print, they'll most likely rally 'em hard today into resistance.

Data:
- Eurozone services PMI (Sep final) up to 54.1 vs 54.0 expected, initial 54.0
- Eurozone retail salse MoM (Aug) up 1.2% vs 0.1% exp, prior -0.4%
- UK services PMI (Sep) down to 58.7 vs 59.0 exp, prior 60.5
- China non-manufacturing PMI (Sep) down to 54.0, prior 54.4
- Japan services PMI (Sep) up to 52.5, prior 49.9

Twitter: @MichaelSedacca

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE