Morgan Stanley Commentary - January 11, 2016

Following yesterday’s China led global selloff support was found on news of a higher CNY reference rate & state backed fund buying in the country. Commodities started the day in positive territory, however multiple bouts of selling pressure would emerge throughout the day to cap any gains, leaving a small basket decline at the time of writing. Coffee was one of the better performers as the index rebalance theoretically gets underway, and one suspects the settlement hour buying may have been an indication of their arrival. Roughly 1000 lots  traded during the period basis KCH, which could imply both a lack of impact and a short horizon for feeding the long position in. Robusta produced a 12 dollar range in the active H6 contract, settling just about in the middle. Volume was poor in what has recently been an interesting market, with the most notable action being the continued volume in upside calls, with the K 1550 C trading 650x and the K 1600/H 1650 CS trading 500. An impressive jobs number was released at 8:30am EST, with both December NFP widely outperforming
expectations (+292k vs +200k), and November being revised higher as well. The market reflected little interest in the data for either KC or equities, an indication of the lack of attention span of traders, or more ominously, the disinterest in historically important US economic data.