Market Update

Tsys lower again this morning, follow thru from Wednesday’s ‘risk on’ related selloff, the 10Y 2.48 (+2.5bps), prices at the lows of the session after a surprise drop in claims (-19k) to 225k the lowest since .  Core Euro bonds seeing some steepening pressure, German bund curve ~5bps steeper, Eurozone inflation reached 2.0% (as exp) for the first time in four years in Feb. Fed gov Brainard in a speech last night advocated removal of accommodation soon, veering away from her usual dovish outlook , saying the US economy ‘appears to be in transition’. Current mkt expectations are ~80% for a rate hike at the March meeting from 30% two weeks ago.  GOCs slightly lower, lagging the decline in tsys by ~1bp, 10s outperforming on the curve after Dec GDP camein as exp 0.3% (2.0% y/y vs 1.7% exp) The BOC auctions $3.0bln in June 27s at noon with roll unch 11.6/11.5., relatively stable in contrast to the steady widening in the 10Y roll of late which for us makes it difficult to get to excited about the June 27s with 10Y yields close to the middle of the 20bp rnage 1.60-1.80%. Provis closed beter bid yest Alberta in blackout now, Ont/QC pre funded to great extent.

News headlines

Dollar rises, global stocks hold highs on March Fed rate hike bets (Reuters) European stocks held near 15-month highs and the dollar strengthened against other top global currencies on Thursday on growing expectations that the U.S. central bank will raise interest rates later this month.

Euro-Area Inflation Hits 2 Percent as ECB Debates Policy (Bloomberg) Euro-area inflation accelerated to the fastest pace since January 2013, providing fresh arguments to those calling for an exit from the European Central Bank’s monetary stimulus program.

Oil down on record U.S. crude stocks, flat Russian output (Reuters) Oil prices fell on Thursday after U.S. crude stocks hit an all-time high and official data showed Russian oil production unchanged in February, with no further cuts to tighten the market and drain global oversupply.

Data-Dependent Yellen Running Out of Reasons to Hold Rates Still (Bloomberg) By most real indicators, the U.S. economy is not too hot or cold, yet financial markets are betting that a core group of Federal Reserve officials who set interest rates are suddenly raring to go.

Valeant’s new bonus math puts debt holders in driver’s seat (TheGlobeAndMail)  Valeant Pharmaceuticals International Inc. shareholders, slide over: Debt holders are driving the bus. The drug maker has changed how it calculates executive cash bonuses. Their incentives are no longer tied to adjusted earnings per share, which were used as an executive incentive when the company was a market darling. The bonuses will now be pegged to Ebitda – earnings before interest, taxes, depreciation and amortization – which, as it happens, is also a metric watched by its creditors.

TD wraps up Canda’s bank earnings parade with another beat and dividend hike (Financial Post) Toronto-Dominion Bank reported quarterly earnings ahead of market expectations, helped by a strong performance by its retail banking businesses in the United States and Canada.

Overnight markets 

Overview: US 10yr note futures are down -0.063% at 123-21, S&P 500 futures are down 0% at 2393.5, Crude oil futures are down -1.58% at $52.98, Gold futures are down -0.81% at $1239.9, DXY is up 0.27% at 102.05, CAD/USD is up 0.24% at 0.7486.

US Economic Data

8:30 AM GDP, m/m, Dec, 0.3%, est. 0.3% (prior 0.4%, revised 0.5%)
GDP, y/y, Dec, 2.0%, est. 1.7% (prior 1.6%, revised 1.9%)
Quaterly GDP Annualized, 4Q, 2.6%, est. 2.0% (prior 3.5%, revised 3.8%)

Canadian Economic Data

8:30 AM Initial Jobless Claims, Feb 25, 233k, est. 245k (prior 244k, revised 242k)
Continuing Claims, Feb 18, 2066k, est. 2060k (prior 2060k, revised 2063k)
9:45 AM Bloomberg Consumer Comfort, Feb 26,  (prior48.0)


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