The weakness in the U.S. stock market on Friday was a controlled burn, as the collapse of the Turkish lira ignited some pent-up selling interest in a market that has been running largely unchecked since the Fourth of July holiday.
So far, it doesn't appear as if market participants are going to let the controlled burn get out of hand either. The S&P futures are down two points and are trading slightly above fair value. That doesn't sound like much, yet it is a notable improvement from overnight when they were down 16 points and trading 0.5% below fair value.
The overnight weakness coincided with further selling of the Turkish lira, as well as reports that India's rupee also hit a new record low against the dollar, fueling some concerns about a contagion effect knocking down emerging market currencies.
The S&P futures have recovered without a confirmed news catalyst, suggesting perhaps that the U.S. market is being viewed as a refuge of sorts amid the din of economic problems elsewhere.
It is worth noting, too, that European bourses have also bounced from their overnight lows. That move has eased some of the selling activity here since it is thought European banks have more direct exposure to Turkish borrowers than U.S. banks do.
Whatever the case might be, the U.S. market is standing relatively tall as the Turkish lira drops, Italian bonds get hit over fiscal concerns, Russia says it will sell U.S. assets after getting hit with new sanctions, Japan's Nikkei suffers a 2.0% drop, and nothing suggests there has been any thawing in the trade fight with China.
In a similar light, the Treasury market has cooled off from a rush of safe-haven buying on Friday. Yields across the curve are mostly unchanged or up a basis point or two, which suggests the risk-off trade is easing.
That trade could get turned back on with the flip of a headline, but for now, things are calm.
There isn't any corporate news of note making waves, other than perhaps the report that Tesla (TSLA) and Elon Musk have been sued by investors. That isn't altogether surprising.
There isn't any economic data of note today either.
The U.S. stock market may just ease into trading matters today, then, cognizant that things are amiss in other locales but resolved to think that the U.S. market is apt to remain a bastion of relative strength.