Market update
US tsys slightly higher, rebounding sharply in NY trading with the 10Y 2.03% (-1bp) and the curve 1bp flatter. Buying in tsys spurred by higher initial claims, thou tsys were already in rally mode with German 10Y bunds as the 10Y bund future triggered buy stops. GOCs are higher, outperforming tsys in the rally despite higher CAD for a second day and yest strong July GDP. Provis another 1bp wider after finishing yest 0.5-1bp wider – Ont 25s 101/99.5 came at 100 yest and was quickly sold out. BC in EUR mkt with 10Y @ MS +7. BMO in the mkt with a 5Y dep note ~130 which looks to be at least a 5-7bp concession based on where we mark BMO 2.84s (116 mid), TRP reopening their longs @ 247 200mln expect fills to be small on that one…
News headlines
- After Rough Quarter, Investors Buckle Up (WSJ) Investors are bracing for more large price swings across stocks, bonds and commodities heading into a month that is associated with market tumult.
- China manufacturing contracts for 2nd consecutive month (FT) Chinese manufacturing activity contracted for the second consecutive month in September, adding to gloom over the state of the economy and raising analysts’ expectations of another rate cut from the central bank.
- Carney on climate: Central bankers stray from mandate (FT) Mervyn King, the former Bank of England governor, said “a successful central bank should be boring”. Judging from Mark Carney’s surprise intervention in the climate change debate this week, his predecessor’s views are out of fashion at Threadneedle Street.
- Questions About Leak at Federal Reserve Escalate to Insider-Trading Probe (WSJ) A high-profile investigation into a leak of sensitive information from the Federal Reserve in 2012 has escalated to an insider-trading probe led by a key market surveillance agency and federal prosecutors in Manhattan, according to people familiar with the matter.
- Sharp rise in Canadian home prices among fastest in the world (G&M) Canadian home prices are rising at a rapid-fire pace that is among the fastest in the world. A quarterly look by Bank of Nova Scotia’s Adrienne Warren shows prices in Canada rose 8.2 per cent in the second quarter of 2015, compared to a year earlier.
Overnight markets
- Overview: IG24 5Y 89.380/90.005 (+0.617), US 10yr note futures are up +0.10% at 128-27+, S&P 500 futures are up +0.17% at 1912.0, Crude oil futures are up +3.39% at 46.62, Gold futures are up +0.08% at $1116.1, DXY is down -0.14% at 96.214.
US Economic Data
- Challenger job cuts came in at 93.2% YoY in September, compared to prior month 2.9% increase.
- Initial jobless claims came in at 277K for the week ending September 25th, higher than expected (271K) and higher than prior week (267K).
- Continuing claims decreased to 2191K from 2244K and lower than expected (2230K).
- Markit US Manufacturing PMI (Final) is forecast at 53.0 in September, equal to preliminary report.
- ISM Manufacturing is forecast at 50.6 in September versus August 51.1.
- Construction spending is forecast at 0.5% MoM in August versus 0.7% in July.
- Total vehicle sales are expected at 17.60M in September lower than July 17.72M.
Canadian Economic Data
- RBC Canadian Manufacturing PMI will be released at 9h30am.
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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230