Market Update

US Treasuries opened NY weaker, steeper after overnight slide began around 2am ET as UK markets reopened US Tsys after New Year’s holiday. US 10-year note is off 20/32 at 95-18, 2.511% yield, 2Y note is at 1.234%, 100-01/32; 5/30Y is mildly steeper at +113.3 bps. US Eurodollar futures lower but off the day’s weakest levels. US stock index futures positioned to open higher. US high-grade corporate bonds could see Westpac Banking (Aa2/AA-) 5Y fixed & 5Y FRN, and a BNP Paribas (Baa2/A-) senior 7Y note (with EUR benchmark 7Y note come to market Tuesday. Oil Futures rose as much as 2.8 percent after adding 45 percent last year, the biggest annual gain since 2009. Officials from Oman and Kuwait told local media they’re cutting oil production in January, fulfilling pledges that they and 22 other producers made on Dec. 10. Prices also advanced as China’s manufacturing purchasing managers index stabilized near a post-2012 high, signaling demand may be supported in the world’s second-biggest oil user.

News headlines 

Stocks Gain With Commodities Amid China Optimism: Markets Wrap (Bloomberg) Stocks rose with commodities on signs China’s economy is strong enough for policy makers to keep pushing for economic reforms in 2017. Crude touched an 18-month high and the dollar rallied as bonds fell.

Oil Climbs to 18-Month High as Kuwait and Oman Fulfill OPEC Cuts (Bloomberg) Oil climbed to an 18-month high in New York as output cuts by Kuwait and Oman signaled OPEC and its partners are delivering on their agreement to stabilize the market.

UK manufacturing growth at a 30-month high, says PMI survey (TheGuardian) Britain’s manufacturers ended 2016 on a strong note, according to a survey that signalled the fastest growth in the sector for more than two years and indicated that the weak pound had boosted exports.

 Global banking regulators postpone approval of new rules (Reuters) Global banking regulators on Tuesday postponed the approval of new capital rules designed to avert a repeat of the financial crisis, saying they needed more time to finalize the long-awaited and contentious reform.

Trump Taps China Critic Lighthizer for U.S. Trade Representative (Bloomberg) President-elect Donald Trump has picked lawyer Robert Lighthizer to head the U.S. Trade Representative office, his transition team said Tuesday in a further sign the incoming administration will take a tougher line on China.

BMO’s Belski Bets on Trump After Nailing Canada’s 18% Stock Gain (Bloomberg) Brian Belski, chief investment strategist at Bank of Montreal, said few believed him last year when he forecast Canadian stocks would emerge from their 2015 drubbing to rocket 18 percent in 2016, outperforming the U.S. for the first time in six years. Today, he’s vindicated.

Overnight markets                                                                     

Overview: US 10yr note futures are down -0.4777% at 123-22, S&P 500 futures are up 0.69% at 2251.75, Crude oil futures are up 2.38% at $55, Gold futures are down 0% at $1151.7, DXY is up 0.63% at 103.43, CAD/USD is up 0.04% at 0.7436.

US Economic Data 

9:45 AM Markit US Manufacturing PMI, Dec F, est. 54.2 (prior 54.2)
10:00 AM ISM Manufacturing, Dec, est. 53.7 (prior 53.2)
ISM Price Paid, Dec, est. 55.5, (prior 54.5)
Construction Spending, m/m, Nov, est. 0.5% (prior 0.5%)

Canadian Economic Data

9:30 AM RBC Canadian Manufacturing, Dec, (prior 51.5)
10:00 AM Bloomberg Nanos Confidence Index, Dec 30, (prior 56.7)


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