Markets had their lowest volume week since the last week of 2011. With the start of earnings season, and the resumption of European worries, volume should pick up a bit this week. The one asset price that had a big move last week was the Euro, down 3% on the week vs. the dollar, trading at 2 year lows on Friday.
Overnight action was very quiet. The dollar is close to unchanged vs. every major cross, SPX futures traded in a 7 handle range, indicating a down 0.25% open right now, Treasuries are slightly higher, and commodities are all close to flat as well, with the exception of grain prices continuing their recent rally.
Asian equity markets were all red overnight, catching up with the down move from Friday’s jobs report. The Shanghai composite was down 2.4%, and the index is now down 1.3% on the year, 2% from 3 year lows. Each day seems to bring more evidence that China is in the midst of severe industrial slowdown, with high debt burdens among Chinese corporates strangling demand.
European markets are slightly lower, and Spanish and Italian sovereign yields continue to tick higher. Along with resumed peripheral stress, European banks are back below the 50 day moving average after falling 6% last week. Earnings this week offer hope, but I’m of the view that their disappointment will bring the focus back on the rapidly deteriorating macro backdrop. Don’t be complacent.