Financials –
No change in recent themes overnight. Global equity markets are relatively flat and the dollar is higher against most other currencies. The dollar strength stems in large part due to euro weakness and ongoing concerns over political situations there. A lot of elections are on deck, with the Dutch just around the corner in just a few weeks. A ruling on President Trump’s travel ban could come at any point in the week and this could prove to be market-moving I suppose. Note that Fed speakers in the past few days have been a mix of hawkish and dovish, giving no real solid lean on their bias. Of course their latest statement was definitely dovish. Fed Chair Yellen will testify to Congress next week and that should be interesting.
The UST market will be in focus today. Following a solid 3-year auction yesterday, we’ll get a more market-moving 10-year auction at noon today. Indirect bidders were strong takers of yesterday’s 3-year auction, and it’ll be interesting to see if that follows through today. Note that specs have liquidated some of their massive short position in USTs but we are still much larger than usual. Meanwhile the charts have formed a fairly solid base here, so further favorable auction results might encourage additional short liquidation.
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