Market Update
US tsys lower but recouping most of o/n losses, US10Y 2.02% (+1bp), strong volume in TY futures (460k). Belly of tsy curve leading slight losses after FOMC decision to lower Fed Funds 25bps without clear signal of further cuts to follow. UK going against the grain of higher global yields after BOE decision, gilts bid on Carney warning of no-deal Brexit impact on growth, GBP falling to fresh lows, Carney warning no-deal could push pound to record lows. GOCs lower, 1bp wider vs tsys, Can/US 10Y 8bps cheaper since last week, 3bps after yest stronger GDP. Today the BOC auctions $2.4bln in reopened Sep 2022s.
News headlines
Dollar Extends Post-Fed Gains; Treasuries Retreat: Markets Wrap (Bloomberg) The dollar extended an advance on Thursday and Treasuries gave back some gains from a day earlier as investors digested the first U.S. rate cut in a decade and the Federal Reserve’s message there may not be many more. S&P 500 futures edged higher and European equities rose.
TSX futures up as focus turns to earnings (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Thursday as investors parsed through a host of major company earnings.
Mind your backs, dollar coming through! (Reuters) The dollar charged to its highest in more than two years on Thursday after the Federal Reserve spoiled hopes of a run of U.S. interest rate cuts.
Factory pain spreads through Asia, Europe; stimulus expected (Reuters) Factory activity contracted across Asia and Europe in July, fuelling worries a prolonged U.S.-China trade war and an economic slowdown could tilt the world toward recession, which central banks would have to fight with depleted ammunition.
Oil Slides as Dollar Strengthens After Fed’s Cautious Rate Cut (Bloomberg) Oil retreated from a two-week high after the Federal Reserve said its interest rate cut was an isolated move, boosting the dollar and dimming demand for commodities priced in the U.S. currency.
Powell says Fed cut not start of long series, drawing Trump ire (BNN) Federal Reserve Chairman Jerome Powell said the first interest rate cut since the financial crisis was to “insure against downside risks” but didn’t signal the start of a lengthy easing cycle, drawing a sharp rebuke from President Donald Trump.
China sees intensive contact with U.S. this month ahead of September trade talks (Reuters) Chinese and U.S. working teams will be in intensive contact this month to prepare “good groundwork” for the next round of face-to-face trade talks in September, the commerce ministry said on Thursday.
Bank of England cuts growth forecasts as Brexit and global worries mount (Reuters) The Bank of England cut its growth forecasts on Thursday in the face of increased Brexit worries and a slowing global economy, but gave no indication it was considering lowering interest rates like other central banks.
Market Overview: US 10yr note futures are down -0.098% at 127-10, S&P 500 futures are up 0.08% at 2984.75, Crude oil futures are down -1.28% at $57.83, Gold futures are down -1.47% at $1416.6, DXY is up 0.37% at 98.877, CAD/USD is up 0.24% at 0.7562.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.571% | 2 Year | 1.888% |
| 5 Year | 1.483% | 5 Year | 1.855% |
| 10 Year | 1.51% | 10 Year | 2.04% |
| 30 Year | 1.722% | 30 Year | 2.54% |
US Economic Data
| 07:30 AM | Challenger Job Cuts YoY, Jul Survey: — Actual: 43.20% Prior: 12.80% |
| 08:30 AM | Initial Jobless Claims, Jul 27 Survey: 214k Actual: 215k Prior: 206k |
| Continuing Claims, Jul 20 Survey: 1674k Actual: 1699k Prior: 1676k | |
| 09:45 AM | Bloomberg Consumer Comfort, Jul 28 Survey: — Prior: 63.7 |
| Markit US Manufacturing PMI, Jul F Survey: 50.1 Prior: 50.0 | |
| 10:00 AM | ISM Manufacturing, Jul Survey: 52.0 Prior: 51.7 |
| ISM Prices Paid, Jul Survey: 49.0 Prior: 47.9 | |
| Construction Spending MoM, Jun Survey: 0.30% Prior: -0.80% |
Canadian Economic Data
| 09:30 AM | Markit Canada Manufacturing PMI, Jul Survey: — Prior: 49.2 |
Disclosure and Disclaimer
The following sources of information have been, or may have been, used partially or in their entirety to compile the herein provided CTI Capital Securities Inc. (“CTI Capital”) ‘Morning Comments.’ CTI Capital believes these sources to be generally reliable, however, as said sources are varied and from third parties, CTI Capital cannot guarantee the accuracy or completeness of said information: Canadian Press (CP); Bloomberg News (BN); Wall Street Journal (WSJ); Stone & McCarthy Research Associates (SMRA); New York Times (NYT); Financial Times (FT); Market News International (MNI); Globe and Mail; Associated Press (AP); CNW Group (CNW); Reuters; Business News Network (BNN); Market Watch; and others.
Ivan Greenstein, Stephan Buu, Émile Bordeleau
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230