U.S. Equity Futures Advanced Alongside European Stocks
“U.S. equity futures advanced alongside European stocks after Chinese officials pledged to support the worlds second-biggest economy, helping to kick-start a rally in Asian shares. The dollar and treasuries rose, while the pound slumped and Italian bonds gave back most of their gains. Carmakers and miners led the advance on the Stoxx Europe 600 Index as both the regional benchmark and S&P 500 futures contracts headed for the first increase in four sessions. In China, the Shanghai Composite Index surged more than 4 percent, the biggest increase since March 2016, in the wake of verbal interventions from authorities at the end of last week and plans to cut personal income taxes. Chinese President Xi Jinping vowed unwavering support for the country’s private sector. Italy’s sovereign bonds pared their advance after the nations populist government called for a budget dialogue with the European Union to address their differences. The pound retreated as the U.K. blurred more red lines in its Brexit negotiations, heightening the danger to Prime Minister Theresa May. Risks still abound across global markets, from the continuing U.S.-China trade showdown and tension surrounding the killing of a Saudi journalist to Italian budget fears and President Donald Trumps unpredictable actions ahead of American midterm elections. Still, equities are attempting to bounce back after a miserable few weeks, and company results from the likes of Amazon, Alphabet, Microsoft and Intel as well as U.S. growth data may provide a welcome stimulus in the coming days. Elsewhere, commodities were mixed. Brent crude hovered close to $80 per barrel and gold dropped. Emerging-market stocks jumped. The South African rand rallied before the country’s budget.
Here are some key events coming up this week:
* Earnings season gathers pace with notable highlights including Amazon.com, Alphabet, Intel, Verizon, Microsoft, Twitter, McDonalds, UBS, Deutsche Bank, Barclays, Total, United Technologies, Caterpillar, Halliburton and Linde.
* Monetary policy decisions are due in Europe, Indonesia, Sweden and Canada.
* ECB policy makers could on Thursday confirm that asset purchases will end this year, reiterating its pledge to keep interest rates at record lows through summer 2019. President Mario Draghi will hold a press conference.
* U.S. gross domestic product growth may have slowed in the third quarter, yet remained near its best pace since mid-2015, according to forecasts ahead of Fridays release.
And these are the main moves in markets:
* The Stoxx Europe 600 Index gained 0.3 percent as of 8:36 a.m. New York time.
* Futures on the S&P 500 Index rose 0.4 percent.
* Italys FTSE MIB Index decreased less than 0.05 percent to the lowest in about 20 months.
* The U.K.s FTSE 100 Index increased 0.8 percent to the highest in more than a week on the biggest climb in a month.
* The MSCI All-Country World Index increased 0.1 percent.
* The Bloomberg Dollar Spot Index climbed 0.2 percent to the highest in almost 10 weeks.
* The euro dipped 0.2 percent.
* The British pound fell 0.7 percent to $1.2988, the weakest in almost three weeks.
* The Japanese yen declined 0.2 percent to 112.77 per dollar, the weakest in almost two weeks.
* The yield on 10-year Treasuries dipped one basis point to 3.18 percent.
* Italys 10-year yield declined two basis points to 3.467 percent.
* Germanys 10-year yield decreased one basis point to 0.45 percent.
* Britains 10-year yield fell four basis points to 1.535 percent, the lowest in almost three weeks on the largest drop in more than a week.
* West Texas Intermediate crude declined 0.3 percent to $68.90 a barrel.
* Brent crude decreased 0.1 percent to $79.68 a barrel.
* Copper gained 1.7 percent to $2.83 a pound, the highest in almost three weeks on the biggest climb in a month.
My position on MBS:
Short term Stays Neutral (Leaning towards going short).
Long term Stays Short.
Long = I anticipate pricing to improve which leads to lower Rates.
Neutral = Market should stay close to open plus or minimums 25bps.
Short = I anticipate pricing to weaken which leads to higher Rates.
Short term = 1 - 2 days out
Long term = 30+ days out