‘The global bond rout deepens:’ Here’s a quick guide to what traders are talking about right now

REUTERS/Dylan Martinez

Dave Lutz, head of Exchange Traded Funds at JonesTrading, has a quick overview of what’s happening in markets on Thursday:

• Bonds are selling off following the Federal Reserve’s interest rate hike on Wednesday. The US 10-year yield has spiked up to 2.85%, the highest level in nearly three years. US stock futures are mixed, with the Dow still shy of the 20,000 mark.
• The economic data calendar includes weekly initial jobless claims and homebuilder sentiment.

Here’s Lutz:

Good Morning! US Futures are mixed, with DJIA higher, but Nasdaq dropping 10bp in the early go. Still seeing follow thru from some of yesterday’s Fed trades ($ and US Yields ripping higher, Gold and Metals getting whacked). Animal Spirits alive in Europe, with the DAX jumping as German Exporters love the weakening Euro. Euro Banks on Fire, jumping over 2% to 11month peaks. UK held back by a sharp drop in those Miners, with FTSE trending unch, while the Swiss Market is under pressure. Over in Asia, Aussie lost 80bp, weighed down by Energy and mining stocks – Nikkei gained small, underperforming the collapsing Yen – Hong Kong whacked by rate-sensitive sectors like property and financials, and China lost 70bp. EM Asia all closed in the red in decent turnover as the $ and US Rates ripped higher.

The Global Bond Rout deepens – 10Y JGBs close at 9bp, just under BOJ’s ceiling – German 10YY plays catch-up, jumping 7bp, and the US 10YY is retreating from 1.65% in the overnight. Heavy Front-End Steepeners again this AM, finally bleeding out towards the long end. The DXY is on FIRE – Sterling weaker despite BOE headers – $/Y thru 118 to 10month lows – Euro 14year lows despite better PMIs, and EM FX like Singapore dollar and Korean won getting hit hard. Metals red across the board, with Silver getting shredded for 6% and Gold down 3% to 10month lows. WTI is trading basically unchanged into Options Expiry later today, and still no bid in Natty Gas into Inventories this AM.

Ahead of us today, we get Weekly Jobless Claims, US CPI and Philadelphia Fed Business Outlook all at 8:30 – Existing Home Sales in Canada hit at 9 – Markit US Manufacturing PMI at 9:45 – NAHB Housing Market Index at 10, and at 10:30 we get the Natty Gas Inventory data right when Bank of Canada’s Poloz speaks in Ottawa. At 4pm we get Total Net TIC Flows from the US treasury. Throughout the session, Credit card charge-offs and delinquencies hit (AXP, BAC, C, COF, DFS, JPM, SYF) – and we get Nov. containerboard/box data.