Market Update

US tsys lower, yield 0.5 – 2bps higher across the curve, 10Y 2.133 (+1.6bps) before August Non-Farm Payrolls, ISM Man.  Below avg volume in TY futures overnight (230k), Sep/Dec roll done, quiet trading ahead of NFP.  Consensus is for a rise of 180k after July 209k increase, yet August seasonality tends to bias the figure lower reflecting back-to-school, lower summer response rates. Weakness in August tends to be revised higher the following months.  Core Euro bonds lower, 10 bund 0.38% (+2.5bps), French OATs lower after auction announcement for next Thursday, more duration than was expected. GOCs opening lower, flatter for second day after blowout Q2 GDP release, curve another 2bps flatter this morning on top of 2bps yest, longs outperforming,10s30s ~3bps narrower yest as longs were bid most of the session following GDP.  Provis opening unch after closing 0.5bps tighter yest on month end buying.

News headlines 

European Shares Climb With Metals Before Jobs Data: Markets Wrap (Bloomberg) European shares advanced, with mining companies extending gains as industrial metals continued a rally fueled by positive economic data surprises this week. The dollar and Treasuries were steady as investors await a U.S. jobs report for clues on the Federal Reserve’s policy-tightening path.

U.S. job growth likely slowed in August; wages seen tepid (Reuters) U.S. job growth likely slowed in August after two straight months of robust gains, but the pace of increase should be more than sufficient for the Federal Reserve to announce a plan to start trimming its massive bond portfolio.

Euro zone factory activity rises in August on strong demand: PMI (Reuters) Euro zone manufacturing activity accelerated in August, clocking the fastest rise in export orders since February 2011 despite a strengthening currency, a business survey showed. Along with evidence of slowly-rising pricing power for businesses, the data may bolster confidence in the European Central Bank to make – and go ahead with – plans to reel back its massive asset purchases program later this year.

IEA still sees no need to release oil stocks (Reuters) The International Energy Agency (IEA) still sees no need for a coordinated international release of oil stocks after Hurricane Harvey disrupted a large chunk of U.S. refining and some production facilities, it said on Friday.

Oil Firms That Cheered Regulatory Rollback Are Quaking on Nafta (Bloomberg) The Trump administration is easing environmental regulations and opening up territory for drilling as part of the president’s bid to unleash the “vast energy wealth” of the U.S. Yet Donald Trump’s push to rewrite the North American Free Trade Agreement could have the opposite effect.

Want an investment with a 10% return or a $600K salary? Surprise, property in Vancouver still your best bet (Financial Post) In the spring of 2012, Dustan Woodhouse, then a 40-year-old Vancouver mortgage broker, broke the cardinal rule of saving for retirement: he liquidated his retirement fund, took the tax hit and plowed the rest into the local real estate market.

Overnight markets  

Overview: US 10yr note futures are down -0.025% at 126-31, S&P 500 futures are up 0.23% at 2475.75, Crude oil futures are down -0.15% at $47.16, Gold futures are up 0.28% at $1325.9, DXY is down -0.08% at 92.59, CAD/USD is down -0.31% at 0.8036.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.313% 2 Year 1.33%
5 Year 1.566% 5 Year 1.712%
10 Year 1.878% 10 Year 2.129%
30 Year 2.287% 30 Year 2.738%

US Economic Data 

8:30 AM Change in NonFarm Payrolls, Aug, est. 180k (prior 209k)
Change in Manufacturing Payrolls, Aug, est. 8k (prior 16k)
Unemployment Rate, Aug, est. 4.3% (prior 4.3%)
Average Hourly Earnings, m/m, Aug, est. 0.2% (prior 0.3%)
Average Hourly Earnings, y/y, Aug, est. 2.6% (prior 2.5%)
9:45 AM Markit US Manufacturing PMI, Aug F, est. 52.5 (prior 52.5)
10:00 AM ISM  Manufacturing, Aug, est. 56.5 (prior 56.3)
ISM Prices Paid, Aug, est. 62.0 (prior 62.0)
10:00 AM University of Michigan Sentiment, Aug F, est. 97.5 (prior 97.6)
Ward’s Total Vehicle Sales, Aug, est. 16.65m (prior 16.69m)

Canadian Economic Data 

7:00 AM MLI Leading Indicator, m/m, Jul, est. 0.2% (prior 0.2%, revised 0.2%)
9:30 AM Markit Canada Manufacturing, Aug, (prior 55.5)


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