As the weak close in the US is followed by weak Asian equity markets european equities will be under pressue this morning. S&P futures are trading below year low, but Eurostoxx closed last night at 2250 almost 100 point above year low.
The bond market yesterday in the US ended in total sell-off mode for all spread products. Long dated governement and swap rates down 20bp, but all other rates unchanged or heavy up on the day with CMBS spread leading the way. US 2 year governement trading this morning at all time low 1.06%. After eur/usd made the trip up yesterday it is trading around 1.25 this morning. Considering action in other markets it should actually be lower, is it a sellling opportunity or a sign for a stronger eur/usd if/when other markets stabilise.
Today could be a culmination day (at least short term) with options expiration Friday. Expect bunds to open 120.25+ and Eurostoxx arpund 2200, both markets out of Bollinger bands. Maybe we have a shot at 767 in S&P futures today. Probably looking to take off short equity/long bund trade today.
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