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The bond market 'adult in the room' is taking a well-earned break today, but that doesn't stop futures traders bidding Treasurys back 2-3bps lower as global risk appetites drop with China's return from Golden Week.

However, as former fund manager and FX trader Richard Breslow notes, it’s a good thing that Japan is on holiday and the U.S. has half of one, it makes it somewhat easier to discount the ugliness that is littering my screens.

Via Bloomberg,

Ordinarily, I’d assume China was playing catch-up after a week off and we’ll see where things stand tomorrow. But that seems like wishful thinking. It’s hard to posit just what will ride to the rescue.

Despite the fact that it’s one of those days when I wouldn’t trade if I didn’t have to, there remains a number of things grabbing my attention, apart from the obvious ones of China and Italy.

Oil strikes me as interesting. If it was any other asset, its price action over the last week would have a lot more people advising caution for the longs at these levels. Suddenly, the backwardation of the Brent futures curve doesn’t look quite as enticing.

Especially given the couple of tops it is trying to leave behind from the highs. If it is going to hold, it doesn’t have a lot of leeway before reaching important support levels. If it does end up getting to the $100 level so often bandied about, it won’t be the inevitable lay-up trade that was promised.

The dollar index is also on the radar screen. Here we go again seeing if it can get over and stay above the 96 level. Three times a charm? I’d be a little bit more agnostic but with the euro sitting just above support versus the dollar and not trading well, it’s worth keeping a very close eye on it.

Everyone is hanging on every headline generated by the Italian coalition and the European Commission’s counter points.

The later we get in the week, I suspect there will be a lot more speculation about next Sunday’s Bavarian state elections.

If the AfD vote surprises to the upside, markets could be in for a rude shock. Germany isn’t Brazil.

I find gold interesting by virtue of it being utterly boring. No matter the news.

But it does look like the downside is the path of least resistance. That might just be the optics of it trading at the lower end of recent ranges.

The Australian dollar has been getting beaten up and looks horrid. Granted it sits not far above well-flagged support, but given China, the yuan, and lower commodity prices, it is striking how it has spent the day absolutely frozen in its tracks. We know they aren’t raising rates anytime soon. But the RBA statement was pretty upbeat. And on the longer charts this level takes on added significance. I could easily be open-minded to some form of counter-trend rally. Especially if Chinese markets manage to regain some equanimity.

As far as equities are concerned, I’m doing my best to ignore the Dow and SPX in favor of the Nasdaq.

Not because I necessarily find this index more interesting, but it’s likely to lead the way for everything else.