US STOCKS: Equity Roundup: Strong Data Weighing on IT, Consumer Discretionary
Stock indexes trading broadly weaker at midday, extending session lows after better than expected Sep NFP data underscored Fed's likely hawkish forward policy path.
Information Technology, Consumer Discretionary and Communication Services underperforming. Currently, SPX eminis trade -96.75 (-2.58%) at 3660.25; DJIA -575.7 (-1.92%) at 29353.99; Nasdaq -389.9 (-3.5%) at 10683.96.
- SPX leading/lagging sectors: Energy sector shares outperforming (+0.38%) oil/gas names doing well as crude jumped higher in the first half (WTI +3.89 at 92.34). Consumer Staples (-1.34%) and Health Care (-1.91%) sectors followed. Laggers: Information Technology (-4.01%) as semiconductors, hardware makers, software and services reversed prior session gains, Consumer Discretionary (-3.86%) and Communication Services (-2.65%) next up, auto makers weighing on the latter, Tesla -6.09%.
- Dow Industrials Leaders/Laggers: Chevron (CVX) adds to Thu's gains +1.11 at 162.53, Merck (MRK) +0.48 at 87.92, Amgen (AMGN) -0.11 at 230.83. Laggers: United Health (UNH) -13.73 at 505.40, Microsoft (MSFT) -12.02 at 234.77, Home Depot (HD) -6.97 at 283.42.
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EURUSD TECHS: Bearish Price Activity
- RES 4: 1.0268 High Aug 15
- RES 3: 1.0175 High Aug 18 and Channel top from the Feb 10 high
- RES 2: 1.0090 High Aug 26 and key near-term resistance
- RES 1: 1.0032 20-day EMA
- PRICE: 0.9943 @ 16:45 BST Sep 7
- SUP 1: 0.9864 Low Sep 6
- SUP 2: 0.9800 Round number support
- SUP 3: 0.9785 2.00 projection of the Jun 9 - 15 - 27 price swing
- SUP 4: 0.9637 Channel base drawn from the Feb 10 high
EURUSD remains in a downtrend and the pair traded to a fresh trend low on Tuesday of 0.9864. The break lower reinforces bearish conditions and confirms a resumption of the downtrend as the pair trends down inside its bear channel, drawn from the Feb 10 high. The move lower maintains the bearish price sequence of lower lows and lower highs. The focus is on the 0.9800 handle next. Initial resistance is seen at 1.0032, the 20-day EMA.
OPTIONS: Euribor Liquidation Pre-ECB
Wednesday's Europe rates / bond options flow included:
- DUV2 107.90/107.70/107.50/107.30p condor, bought for 2.75 in 5k
- DUV2 108.20/107.70ps 1x1.5, bought for 9.5 up to 10.5 in 15k
- RXV2 139.50/138.50ps, bought for 11 in 4.7k
- RXX2 139/135/131 put fly sold at 26.5 in 1.75k
- ERH3 97.87/98.00/98.75c ladder, bought for -1 (receive) in 11k
- ERU2 99.125/98.25/98.375c fly, sold at 2.5 in 2k
- ERZ2 98.125/98.25/98.375/98.50c condor, sold at 2.5 in 5k
- 0RU2 97.375/97.625/97.875c fly, sold at 7 in 2.75k
BONDS: EGBs-GILTS CASH CLOSE: UK 2s Rally, Bunds Stronger Pre-ECB
The UK curve bull steepened violently Wednesday as BoE rate hike expectations were pared back, while EGBs were relatively steady with peripheries outperforming ahead of Thursday's ECB decision.
- 2Y UK yields were briefly poised for their biggest drop since 2009, with more than one 25bp hike priced out of the BoE hiking path at one point with senior BoE officials' TSC testimony were seen leaving a 50bp or 75bp hike next week "on a knife edge".
- Pricing is about the same now for the ECB (preview here) and BoE Sept meetings, at 65-66bp.
- The German curve bull flattened, while periphery EGB spreads fell ahead of the ECB, led by BTPs.
- Thursday is shaping up as very busy, both with the ECB meeting, and potentially more info on the UK fiscal package to be unveiled (which would impact BoE pricing).
Closing Yields / 10-Yr Periphery EGB Spreads To Germany:
- Germany: The 2-Yr yield is down 1.3bps at 1.105%, 5-Yr is down 4bps at 1.374%, 10-Yr is down 6.1bps at 1.577%, and 30-Yr is down 7.8bps at 1.681%.
- UK: The 2-Yr yield is down 20.2bps at 3.001%, 5-Yr is down 11bps at 2.917%, 10-Yr is down 6.7bps at 3.034%, and 30-Yr is down 4.4bps at 3.369%.
- Italian BTP spread down 7.1bps at 229.1bps / Greek down 2.1bps at 257.9bps
