03/05/2017

Market Update

Tsys trading lower, US 10Y ~1bp higher 2.29% after 4bp rally yest, little reaction to slight beat on ADP +177 vs 175K exp with a small revision to March, FOMC decision later this afternoon, mkt will look for more info on balance sheet and inflation outlook.  Stock futures lower, S&P -3.5 and European stocks slightly lower on poor earnings from Apple. Treasury Q1 refunding statement mentions the Fed could increase bill & coupon sizes should the Fed end reinvestment, studying the issuance of ultra long bonds. Core Euro bonds. GOCs unch after tsy ann., Ontario issuing GBP 400mln FRNS @ 3ml + 9. Provis were well bid to start yest yet ended up getting hit on screens with the huge 5-6bp rally in GOCs yest afternoon.

News headlines 

Stocks Sag on Apple Miss; Dollar Climbs Before Fed: Markets Wrap (Bloomberg) U.S. stock futures pointed to a downbeat opening after European shares fell from a 20-month high as investors digested poor overnight news on Apple Inc. earnings. The dollar strengthened before a Federal Reserve meeting where policy makers will need to mull over another soft patch in the U.S. economy.

China urges all sides in North Korea standoff to ‘stop irritating’ one another (Reuters)     China on Wednesday called on all parties in the Korean standoff to stay calm and “stop irritating each other” a day after North Korea said the United States was pushing the region to the brink of nuclear war. The United States has urged China, reclusive North Korea’s lone major ally, to do more to rein in its neighbor’s nuclear and missile programs which have prompted an assertive response from the Trump administration, warning that the “era of strategic patience” is over.

Exchanges Still Dreaming of Deals After LSE-Deutsche Boerse Dies (Bloomberg) The world’s biggest exchanges are still looking for deals even though the merger of Deutsche Boerse AG and London Stock Exchange Group Plc was scuttled by European regulators.

Euro-Area Recovery Keeps Pace as ECB Stimulus Decision Nears (Bloomberg) The euro area maintained its growth momentum at the start of 2017, strengthening the case of those pressuring the European Central Bank to sketch out an end to extraordinary stimulus measures. Gross domestic product rose 0.5 percent in the first three months of the year, according to an initial estimate published by the European Union’s statistics office on Wednesday. That’s in line with the median estimate in a Bloomberg survey of economists and matches the pace of the previous quarter.

Toronto Home Price Growth Slows in April as New Listings Soar (Bloomberg) Toronto home price gains slowed in April and new listings soared the most in seven years, signaling the red-hot market may be cooling after the Ontario government imposed new measures to curb runaway gains in Canada’s biggest city. Housing prices jumped 25 percent last month from a year earlier, down from the 33 percent annual increase in March. The average price of C$920,791 ($671,000) in April was just 0.5 percent higher than in March, according to figures from the Toronto Real Estate Board.

Loblaw profit beats estimates on lower expenses (TheGlobeAndMail) Canadian grocery and pharmacy retailer Loblaw Cos Ltd reported a higher-than-expected quarterly profit as the company kept a tight lid on expenses and attracted more customers to its stores with discounts. Loblaw, which sells everything from grocery to wireless mobile products, has been streamlining operations to counter intense competition from U.S. discount stores and ecommerce companies.

Overnight markets 

Overview: US 10yr note futures are down -0.05% at 125-21, S&P 500 futures are down -0.14% at 2382.5, Crude oil futures are up 0.55% at $47.92, Gold futures are down -0.26% at $1253.7, DXY is up 0.1% at 99.078, CAD/USD is up 0.14% at 0.7284.

US Economic Data

7:00 AM MBA Mortgage Applications, Apr 28, 0.1% (prior 2.7%)
8:15 AM ADP Employment Change, Apr, 177k, est. 175k (prior 263k, revised 255k)
9:45 AM Markit US Services PMI, Apr F, est. 52.5 (prior 52.5)
  Markit US Composite PMI, Apr F, (prior 52.7)
10:00 AM ISM Non-Manf. Composite, Apr, est. 55.8 (prior 55.2)
14:00 AM FOMC Rate Decision, May  3, est. (0.75-1.00%)

Canadian Economic Data

There is no major economic news release.

 

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