FX markets opened first and gapped down 100pips in EURUSD only to retrace back to fill the gap and then drop all the way back down again - all within the first hour. European credit markets (early CDS runs) are trading very marginally wide of their European closing levels from Friday and that is where US equity futures have pulled back to - 11/12am ET Friday levels - extinguishing the late-day hopium-inspired melt-up. We noted Friday that the late-day jump higher in stocks was not supported by any other asset class and sure enough, ES has retraced it all.
ES is down 17pts from Friday's close - testing the lows from Friday's early trading.
The EUR is starting to crack lower once again as we post - back below 1.3675 - under Thursday's lows as DXY pushes above Thursday's highs.
CONTEXT - adjusted for the fact that TSYs have yet to open - indicates ES should be more like 1185 currently (about 10pts lower) - driven by the shifts in carry pairs (mostly AUDJPY and EURJPY), gold's relative strength (within a hair of $1830), and WTI's continued slide (back under Friday's lows around $87). Silver is holding up near Wednesday's highs while Copper is below last week's lows now (and notably back to August 9th lows for the DEC futures contract and down 8.5% from its September 1st highs!).
TSY futures are well bid with the Long bond up over a point, 10Y +16 ticks (around a 6bps compression in yields), and 5Y +5 ticks.
SovX is being quoted unchanged and SUBFIN 3-4bps wider (with SENFIN unch so far). The short-end of the XOver credit curve is underperforming +9bps at 670/677. Asia Pac sovereigns are around 3bps wider.
As we post, risk assets are starting to leg gently down.