Day Trading Strategies Market Up-Date

– It appears that the S&P downgrades of
euro zone sovereigns are imminent. Before the open of US trade, another round
of France downgrade rumors made the rounds, however this time there was greater
intensity to the reports, prompting reports in financial media and responses of
“no comment” from S&P itself and the French Treasury. Then after
10:00ET, the French government was said to have acknowledged the receipt of
notice that it will be downgraded by S&P. A subsequent report in the FT
suggested France and Austria would be cut one notch to AA+ from AAA. At the
same time, there seems to be a certain amount of friction in Greece, where the
government and the IIF continue to negotiate over private-sector bond haircuts.
Reports indicate that negotiators are becoming less and less optimistic about
the potential for a deal, potentially putting Greece disorderly default back on
the table. US equities are responding relatively calmly, down but not overly
weak as chatter picks up the Fed still has its finger on the QE trigger.
This morning’s US trade data – the trade deficit for November was higher due to
greater petroleum imports, while crude import prices for December fell more
than expected. The preliminary January University of Michigan Confidence
index was better than expected, and hit its highest level since May 2011.
Commodity prices have moved lower while the Greenback and Treasury markets have
rallied in the wake of these latest European headlines. The US 10-year yield
has slipped to 1.85% while the bund has returned to 1.75%. The Euro has made a
fresh 17 month low briefly dipping below 1.2650 before rebounding.