Market Update
US tsys higher, thou prices have pulled back since early European trading , TY futures at the lows of the session despite weaker June ADP (102k vs 140k) and ahead of early close, the 10Y reached a low 1.935%, now 1.95% . Global bonds continuing to rally , core EGB curves flattening. Gilt yields 2-4bps lower after weaker than expected UK services PMI. Yesterday’s appointment of Christine Lagarde as ECB head was seen as dovish by mkts according to MNI. GOCs lagging the rally in tsys, spreads another 2-3bps wider yesterday. Today the BOC auctions $4.0bln reopened 1.5% Sep 24s with the Sep 24/Mar 24 roll now -0.1bps.
News headlines
U.S. Yields Hit Lowest Since 2016 as Stocks Rise: Markets Wrap (Bloomberg) Bonds extended gains globally ahead of the U.S. holiday as investors weighed the prospect of more dovish appointees to two of the world’s major central banks. Stocks in Europe rose with U.S. equity futures, while those in Asia were mostly lower.
TSX set to open higher as oil prices rebound (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Wednesday, as oil prices rebounded after a steep fall in the previous session.
Oil Edges Higher as Inventory Drop Helps to Ease Post-OPEC Gloom (Bloomberg) Oil gained after suffering its worst reaction to an OPEC meeting in more than four years.
No technocrat, Lagarde brings listening, diplomacy to ECB table (Reuters) Christine Lagarde will raise the profile of the European Central Bank, making it a more politically-savvy institution that takes its message directly to the people. However policy innovation, the trademark of her predecessor, may be relegated.
Euro zone June business growth slow as factories still faltering (Reuters) Euro zone business activity picked up slightly last month but remained weak as a modest but broad-based upturn in the services industry offset a continued deep downturn in factory output, a survey showed.
U.S. 10-year yields hold near lowest since Nov 2016 (Reuters) The yields on U.S. 10-year Treasury notes hovered above their lowest level since November 2016 on Wednesday in advance of a report on private U.S. employment from payroll processor ADP, which analysts forecast a rebound in company hiring in June.
Trump picks two Fed nominees likely to support easier policy (BNN) After a yearlong assault on the Federal Reserve and its chairman, President Donald Trump has tapped two wildly different economists to the central bank’s board who seemingly have one important thing in common.
Market Overview: US 10yr note futures are up 0.11% at 128-09, S&P 500 futures are up 0.2% at 2985.5, Crude oil futures are up 0.84% at $56.72, Gold futures are up 1.01% at $1422.2, DXY is down -0.01% at 96.717, CAD/USD is down -0.05% at 0.7634.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.472% | 2 Year | 1.748% |
| 5 Year | 1.396% | 5 Year | 1.727% |
| 10 Year | 1.45% | 10 Year | 1.952% |
| 30 Year | 1.661% | 30 Year | 2.484% |
US Economic Data
| 07:00 AM | MBA Mortgage Applications, Jun 28 Survey: — Actual: -0.10% Prior: 1.30% |
| 08:15 AM | ADP Employment Change, Jun Survey: 140k Actual: 102k Prior: 27k |
| Trade Balance, May Survey: -$54.0b Prior: -$50.8b | |
| Initial Jobless Claims, Jun 29 Survey: 223k Prior: 227k | |
| Continuing Claims, Jun 22 Survey: 1675k Prior: 1688k | |
| 09:45 AM | Bloomberg Consumer Comfort, Jun 30 Survey: — Prior: 63.6 |
| Markit US Services PMI, Jun F Survey: 50.7 Prior: 50.7 | |
| Markit US Composite PMI, Jun F Survey: — Prior: 50.6 | |
| 10:00 AM | Factory Orders, May Survey: -0.60% Prior: -0.80% |
| Durable Goods Orders, May F Survey: -1.30% Prior: -1.30% | |
| Durables Ex Transportation, May F Survey: — Prior: 0.30% | |
| Cap Goods Ship Nondef Ex Air, May F Survey: — Prior: 0.70% | |
| Cap Goods Orders Nondef Ex Air, May F Survey: — Prior: 0.40% | |
| ISM Non-Manufacturing Index, Jun Survey: 56.0 Prior: 56.9 |
Canadian Economic Data
| 08:30 AM | Int’l Merchandise Trade, May Survey: -1.70b Prior: -0.97b |
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, Émile Bordeleau
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230