Market Update
- US tsys rising after payrolls rose a less than exp 151k last month vs 180k exp with AHE also weaker up 0.1%/2.4% y/y vs 0.2%/2.5%. Overnite saw long term JGB yields rise 6bps as the BOJ said ‘helicopter money’ was not in the cards, USDJPY close to one month high. UK gilts lower, curve steeper after UK Markit/CIPS PMI came in much stronger at 49.2 for August. Crude rebounding 0.90% to 43.54, still down 4% for the week. GOCs lagging the move in tsys post payrolls – USDCAD off 75pps on combination of weaker payrolls and improved Cdn July trade deficit 2.5bln vs 3.3bln exp.
News headlines
- Treasuries Fall as Dollar Gains in Payrolls Countdown; Oil Rises (Bloomberg) Treasuries declined and the dollar advanced in the countdown to a key U.S. jobs report that’s seen shaping expectations for the timing of the next interest-rate increase. Oil rose as Russia said it will seek a deal with major producers to freeze output. Yields on 10-year Treasuries climbed to the highest level this week before monthly nonfarm payrolls data that has exceeded estimates in the last two readings. The Bloomberg Dollar Spot Index extended a second weekly gain. European equity advanced while a measure of U.S. stock volatility hovered near a two-year low. Crude pared its biggest weekly drop since January, and gold traded close to the lowest since June.
- South Korea GDP growth in third-quarter to be slower than second-quarter: finance ministry official (Reuters) South Korea’s growth is likely to be slower in the third quarter than the second, a finance ministry official said on Friday after central bank data showed growth of 0.8 percent over April-June.The official, who declined to give his name, said growth for this year will be in line with the government’s forecast at around 2.8 percent, adding that the likelihood of a sharp downturn at this point was low.
- Manufacturing falters as global demand weakens (Reuters) Manufacturers across Asia and Europe showed few signs of returning to health in August, as demand remained fitful at best, although British factories bucked the global trend, surveys showed on Thursday. Britain’s manufacturing rebounded from the shock of June’s vote to leave the European Union, helped by a boost to exports from sterling’s post-Brexit slump [GB/PMIM].
- Divided Irish cabinet to meet on whether to fight EU on Apple tax (Reuters) Ireland’s fragile coalition government will try on Friday to overcome cabinet divisions on whether to join Apple in appealing against a multi-billion-euro back tax demand that the European Commission has slapped on the iPhone maker. Finance Minister Michael Noonan has insisted Dublin would fight any adverse ruling ever since the European Union began investigating the U.S. tech giant’s Irish tax affairs in 2014.
- Enbridge Inc suspends regulatory process for delayed $2.6-billion Sandpiper pipeline project (Financial Post) Enbridge Inc. has announced further delays to an oil pipeline proposed to run from the Bakken oilfields of North Dakota through Minnesota to a terminal in Superior, Wis. The Calgary-based company said the $2.6-billion Sandpiper project will be delayed until Bakken crude oil production recovers sufficiently to support its construction. It added the new pipeline is not expected to be needed for more than five years.
- Bombardier gets final installment of Quebec’s $1 billion investment (Reuters) Canadian plane and train maker Bombardier Inc BBDb.TO said on Friday it had received the final installment of $500 million from the province of Quebec as part of a previously announced investment in its CSeries aircraft program
Overnight markets
- Overview: US 10yr note futures are up 0.0119% at 130-31, S&P 500 futures are up 0.25% at 2172.75, Crude oil futures are up 1.25% at $43.7, Gold futures are up 1.01% at $1330.4, DXY is down -0.3% at 95.362.
US Economic Data
- 8:30 AM: Change in Nonfarm Payrolls, August, 151k, est. 180k (prior 255k, revised 275k)
- Change in Private Payrolls, August, 126k, est. 180k (prior 217k, revised 225k)
- Change in Manufacturing Payrolls, August, -14k, est. -4k (prior 9k, revised 6k)
- Unemployment rate, August, 4.9%, est. 4.8% (prior 4.9%)
- Average Hourly Earnings, m/m, August, 0.1%, est. 0.2% (prior 0.3%)
- Average Hourly Earnings, y/y, August, 2.4%, est. 2.5% (prior 2.6%)
- 10:00 AM : Factory Orders, July, est. 2.0% (prior -1.5%)
- Durable Goods Orders, July F, est. 4.4% (prior 4.4%)
- Durables Ex Transportation, July F, est. 1.5% (prior 1.5%)
Canadian Economic Data
- 8:30 AM: Labor Productivity, q/q, 2Q, -0.3%, est. -0.4% (prior 0.4%)
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