Market Update
Tsys lower trading at the low end of o/n range , yields 2-3 bps higher 10Y 2.484% after ADP came in +246K vs 168K exp. FOMC decision at 2pm, no change expected and there is no news conf yet statement will be closely watched for clues as to timing of future rate hikes. Core European bonds lower, pressured by rise in peripheral yields led by Spain & Italy. GOCs lower , spds -12 bps wider vs tsys as prices react more to pressure in EU bonds. Provis unch to start focus on Ontario 5Y global.
News headlines
Futures rise on Apple rally; Fed meeting in focus (Reuters) U.S. stock index futures rose on Wednesday, in an upbeat start to February, buoyed by strong earnings from Apple, while investors awaited the Federal Reserve’s decision on interest rates.
Oil edges further above $55 on Russia, OPEC cuts (Reuters) Oil edged further above $55 a barrel on Wednesday supported by signs that Russia and OPEC producers are delivering on promised supply reductions, although a report showing a large rise in U.S. crude inventories limited gains.
China January factory activity expands for sixth month at modest pace but risks loom (Reuters) China’s manufacturing sector expanded for the sixth month in a row in January as the world’s second-largest economy continued to benefit from record bank lending and a construction boom.
Fed’s message on portfolio trimming: prepare, don’t fret (Reuters) Federal Reserve policymakers are putting markets on notice that the central bank’s $4.5 trillion balance sheet is back on the agenda in an apparent effort to give investors time to prepare for changes rather than to signal any action is imminent.
BoC looks to overhaul ‘off track’ forecasting tools, Poloz says (TheGlobeAndMail) The Bank of Canada has launched a multiyear effort to overhaul the sophisticated computer models it uses to forecast the economy after they failed to foreshadow the deep and persistent aftershocks of the global financial crisis. Governor Stephen Poloz acknowledged Tuesday that its forecasting tools have been pushed “persistently off track” in the decade since the 2007-09 crisis, leading to missed targets on inflation and other indicators.
Apple defies Wall Street with strong revival in iPhone sales. (Reuters) Apple Inc reclaimed the throne as the world’s top smartphone seller for the first time in five years on Tuesday, beating out rival Samsung in units shipped for the holiday quarter and boosting revenues with a strong showing for its new, top-of-the-line iPhone 7 Plus. The iPhone sales numbers, and a profit of almost $18 billion, both handily beat Wall Street expectations, sending its shares up 3 percent in after-hours trading.
Overnight markets
Overview: US 10yr note futures are down -0.2511% at 124-5, S&P 500 futures are up 0.26% at 2280.5, Crude oil futures are up 0.89% at $53.28, Gold futures are down -0.26% at $1208.2, DXY is up 0.24% at 99.746, CAD/USD is up 0.34% at 0.7648.
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Jan 27th, -3.2% (prior 4.0%) |
| 8:15 AM | ADP Employment Change, Jan, 246k, est. 168k, (prior 153k, revised 151k) |
| 9:45 AM | Markit US Manufacturing PMI, Jan F, est. 55.1 (prior 55.1) |
| 10:00 AM | ISM Manufacturing, Jan, est. 55.0 (prior 54.7) |
| ISM Price Paid, Jan, est. 65.5 (prior 65.5) | |
| Construction Spending, m/m, Dec, est. 0.2% (prior 0.9%) | |
| FOMC Rate Decision, Feb 1, est. 0.50-0.75% (prior 0.50-0.75%) | |
| Wards Total Vehicle Sales, Jan, est. 17.50m (prior 18.29m) | |
| Wards Domestic Vehicle Sales, Jan est. 14.00m (prior 14.19m) |
Canadian Economic Data
| 7:00 AM | MLI Leading Indicator, m/m, Dec, 0.6% (prior 0.3%, revised 0.4%) |
| 9:30 AM | Markit Canada Manufacturing PMI, Jan, (prior 51.8) |
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, David Leclair-Legault
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230