Market update

US Tsys slightly higher, curve flatter with little reaction to small miss in ADP (190k vs 200k), US 10Y 2.165 (+1bp). Tsy futures range bound overnight, underperforming core EU bonds as 10Y gilts, bunds ~1bp lower. Aussie govt bonds sharply lower despite slower Q2 GDP (0.2% vs 0.4%). In Canada, GOCs are lower , spds unch vs tsys, curve steeper before $400mln RRB auction this aft (reopen 47s).

News headlines

  • Fed official flags concern over US growth (FT) Slowing foreign economies, stock market volatility and falling commodity prices could deal a setback to US growth, a Federal Reserve policymaker warned as he made the case for a modest path of monetary policy tightening.
  • Investors Betting on More ECB Stimulus (WSJ) Six months after the European Central Bank launched its blockbuster bond-buying program to rouse the region’s economy, some investors are betting that authorities will crank stimulus efforts even higher.
  • Canada officially in a recession as GDP shrinks 0.5% in second quarter (FP) A technical recession, but not an “outright recession. ”That is the verdict from economists Tuesdayafter Statistics Canada reported that the Canadian economy shrank at an annual rate of 0.5 per cent in the second quarter, following a 0.8 per cent decline (revised from an earlier figure of 0.6 per cent) in the first three months of the year.
  • Market Bets Abound, but Where Are the Banks? (WSJ) The past two weeks of nearly unprecedented stock-market volatility once would have marked ideal trading conditions at the country’s biggest banks. That era is over.
  • Small U.K. Banks Show Big Rivals How To Travel Light (WSJ) Picture a life without the baggage of the past. In the U.K., smaller banks are showing established rivals how that could be.

Overnight markets

  • Overview: IG24 5Y 83/83.5 (-1.25), US 10yr note futures are down -0.04% at 127-08+, S&P 500 futures are up +0.76% at 1930.50, Crude oil futures are down -1.59% at 44.69, Gold futures are down -0.14% at $1138.2, DXY is up +0.28% at 95.720.
  • US BANK CDS (5yr): BAC 80/84 (-1), GS 98/102 (+1), MS 90/94 (-1), C 91/95 (-1), JPM 81/85 (+0), WFC 59/63 (+0)

 US Economic Data

  • MBA mortgage applications came in this morning at +11.3% for the week ending August 28, versus prior week 0.2% increase.
  • ADP employment change came in at 190K in August compared to 177K in July (Expected 200K).
  • Nonfarm productivity (F) came in at 3.3% in 2Q 2015 (1.3% P) versus -1.1% for previous quarter.
  • Unit labor costs (F) increase -1.4% in 2Q 2015 (0.5% P) compared to the 2.6% in 1Q 2015.
  • ISM New York (August) will be release at 9:45 (last report: 68.8).
  • Factory orders are expected at +0.9% MoM in July fallowing +1.8% in June.
  • Fed will release beige book at 14:00.

Canadian Economic Data

  •   There is no major economic data today.


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