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(Bloomberg) — U.S. equities rebound on heavy volume following yesterday’s selloff as the S&P advances for the first time in seven days rising above 2,700.

Technology shares, boosted by strong results from Microsoft and Twitter, and consumer discretionary stocks led the way higher.

The Bloomberg Dollar Index rises above 1,200, hitting its highest level since June 2017 as yen, euro, CAD decline.

Yields on the U.S. 10 year rise as the first public comments from Federal Reserve Vice Chairman Richard Clarida shows he backs continued, gradual rate hikes. He adds that there are no alarms going off now from the labor market.

In Europe, the ECB still intends to wind down its bond-buying program by year-end and hold interest rates at their current record lows through the summer of 2019.

Key Headlines:

  • U.S. pending home sales rose in 0.5 percent last month
  • Weekly jobless claims rose 5,000 to 215,000, matching the estimate
  • Italian Deputy Prime Minister Luigi Di Maio told reporters in Rome his country doesn’t intend to leave the Euro

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USTs Bear Flatten as Stock Gains Weigh; Belly Lags After 7Y Sale
(Bloomberg) — Treasuries traded heavy for most of the U.S. session as stocks pared the bulk of Wednesday’s sell-off, and 7-year supply weighed on belly of the curve.

The S&P 500 Index was higher by 2.3% into the cash close, with technology names among top performers; NYSE Fang+ pared all of Wednesday losses.

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  • Yields cheapened by up to 4bp across the 5-year sector as the belly cheapened against the curve into and out of the soft 7- year sale, flattening 5s30s by ~2.2bp
  •  10-year yields were cheaper by 3.2bp at 3.14%, edging back toward the middle of the weekly range
    • Treasury 7-year sale tailed the WI by 0.5bp with direct bids again notably weak, similar to both 2- and 5-year auctions this week; demand for the bond may have been damped, given the richness of the belly vs the long- and short- end
  • Afternoon session was mostly muted, with Treasuries failing to climb given strength in stocks; futures volumes were mostly in line with recent avg.

 

  • Eurodollar strip was steady, lower by 0.5bp to 1.5bp; morning session saw heightened spread activity, with flows including Jun19/Dec19 block flattener in 32,708 at 15bp and 11.5k Mar19/Dec19 lifted at 14.5bp.

 

  • Large eurodollar options strangle also traded over the morning via 28k 2EZ8 96.50/97.00 strangle at 6 ticks

Screen Shot 2018-08-05 at 4.29.51 PM.png(Bloomberg) — Wheat falls, capping for the biggest two-day drop in seven weeks, as U.S. export sales slump and the outlook improves the crop in Russia, the world’s top shipper.

Corn and soybeans declined. In the week ended Oct. 18, U.S. export sales fell 5.8% from a week earlier, USDA data showed Thursday. Heavy rain started across Russia on Wednesday, easing dryness in previous weeks that stressed crops seeded for next year’s harvest.

Drivers

As much as double the normal amount of rain fell in some southern Russian areas on Wednesday.

U.S. export sales fell to 448,600 tons from 476,000.

 

Algeria is said to buy 500,000 to 600,000 tons in a tender The dollar rises to the highest this year against a basket of currencies, eroding the appeal U.S. grain.

Prices

Wheat futures for December delivery fall 2.5% to $4.87 1/4 a bushel on the Chicago Board of Trade after touching $4.85 1/2, the contract’s lowest since Jan. 24 In two days, the price drops 4.3%, the most since Sept. 5. 

Market talk

Demand isn’t picking up even at low prices, Kevin Stockard, market analyst at CHS Hedging, says in a website report Algeria probably bought French and Argentine wheat in the tender, consulting co. Agritel says in a report.

Other markets

Corn futures for December delivery fall 2% to $3.61 a bushel after touching $3.60 1/2, the lowest since Oct. 11. 

Soybean futures for January delivery drop 1% to $8.54 1/2 a bushel after touching $8.52 3/4, the lowest since Sept. 25. 

The oilseed drops for the third straight day, the longest slump since Sept. 18

Soybean-meal futures for December delivery decline for the sixth straight session, the longest slump since Aug. 28; soybean oil falls to the lowest since Sept. 24

 



-R.W.N II, yours in 322.

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