cti2015header-morning comments web

Market Update

  • Treasuries seep lower amid revised higher 4.3% 2Q unit labor costs vs. prelim 2.0% gain; 10-year note is now at 1.607%. Pressed on latest claims, curve extends bear steepener move. Flow pretty orderly so far, still have several second tier data points today, ISM US PMI, waiting for headline August employ tomorrow. Also, Cleveland Fed Mester later today. China PMIs had mixed readings : govt PMI quite strong, Caixin PMI weaker. China’s Manufacturing PMI printed 50.4 in August, its highest reading since October 2014. Nonmanufacturing PMI, however, came in at 53.5, its weakest reading in three months.Initial unemployment claims +2k to 263k in Aug 27 week, as expected, following unrevised 261k in prev week. The 4-week moving average -1,000 to 263,000, as the July 30 week’s 267k level rolled out of the calculation. If there is no change in the headline number next week, the average will decline further.

News headlines                                                                                                 

  • Stock futures rise ahead of economic data (Reuters)S. stock index futures were higher on Thursday ahead of a raft of economic data, including a crucial jobs report on Friday.
  • Oil prices slide on U.S. inventory data, but analysts warn there is more to the story (Financial Post) Prices for international crude benchmarks slipped Wednesday on an unexpected rise in U.S. oil storage levels, but some analysts insist markets are still heading back toward balance as demand continues to rise. Benchmark crude West Texas Intermediate fell more than three per cent in Wednesday morning trading while weekly stockpiles of oil, liquified gases and refined products in the United States rose to 1.4 billion barrels, according to U.S. Energy Information Administration data. But some analysts say that rising U.S. storage should be considered alongside a sharp decline in so-called “spare capacity” elsewhere in the world, namely Saudi Arabia.
  • Weak Pound Drives U.K. Factories Back From Brexit Shock (Bloomberg) U.K. factory activity reached a 10-month high in August as a weaker pound boosted exports, underscoring early evidence of British economic resilience after the Brexit vote. IHS Markit said its Purchasing Managers Index, which dropped below the key 50 level in July, jumped by a record to 53.3.
  • Pound Bulls Encouraged by Signs of Post-Brexit Economic Optimism (Bloomberg) Pound bulls are getting solace as evidence mounts that the resilience of the British economy since the June Brexit vote may be sustained. Sterling rose for a second day against the dollar and climbed to its strongest level in four weeks versus the euro as a measure of U.K. manufacturing output unexpectedly expanded in August. Coming a day after GfK said its household confidence index last month regained almost half the ground lost in July, it’s the latest indication that the nation’s fortunes outside the European Union may not be as dire as some economists predicted, at least in the short term.
  • China’s Factory Gauge Unexpectedly Rises to Highest Since 2014 (Bloomberg) China’s official factory gauge unexpectedly rose last month to the highest level in almost two years, suggesting the economy’s stabilization remains intact and that a weakening in July was flood-related and temporary.
  • Canadian Western Bank profit falls, warns of more oil impact (Reuters) Canadian Western Bank CWB.TO reported a decline in earnings in the third-quarter on Thursday and said it expected the low price of oil to continue to impact its clients in the province of Alberta during the rest of 2016.


Overnight markets

  • Overview: US 10yr note futures are down -0.2984% at 130-17, S&P 500 futures are down 0% at 2169.5, Crude oil futures are down -0.98% at $44.26, Gold futures are down -0.34% at $1307, DXY is up 0.07% at 96.091.

US Economic Data

  • 8:30 AM: Nonfarm Productivity, 2Q F, -0.6%, est. -0.6% (prior 0.5%)
    • Unit Labor Costs, 2Q F, 4.3%, est. 2.1% (prior 2.0%)
    • Initial Jobless Claims, August 27th, 263k, est. 265k (prior 261k)
    • Continuing Claims, August 20th, 2159k, est. 2145k (prior 2145k)
  • 9:45 AM: Markit US Manufacturing PMI, August F, est. 52.1 (prior 52.1)
  • 10:00 AM: Construction Spending, m/m, July, est. 0.5% (prior -0.6%)
    • ISM Manufacturing, August, est. 52.0 (prior 52.6)
    • ISM Prices Paid, August est. 54.8 (prior 55.0)

Canadian Economic Data

  • 9:30 AM: RBC Canadian Manufacturing Index, August, (prior 51.9)


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