Market Update
US tsys slightly higher on avg volume in TY1 futs, curve flatter & US 10Y 1.55% (-1bp)- tsys barely reacting to better than expected ADP (179k vs 170k). Euro equities slightly higher, giving up earlier gains after yest saw the Euro Stoxx down 2.0% its largest loss since June 27th. HSBC up over 4.0% after announcing share buyback despite posting a 29% drop in earnings. GOCs opening higher , rebounding after ADP as stocks decline, weaker oil. Provis unch after closing 1.5bps wider yest
- News headlines
- Stocks Slip as Emerging Markets Bear Brunt With Crude Below $40 (Bloomberg) A gauge of global stocks fell for a third day as a rebound in European banks failed to trigger a broader recovery. Emerging markets sank and the ringgit weakened with oil holding below $40 a barrel. S&P 500 futures were lower even with European equities little changed as HSBC Holdings Plc, Europe’s biggest bank, jumped after announcing a share buyback. Crude halted a two-day drop before an update on U.S. oil inventories, while gold was near its highest price since July 11. Industrial metals declined and the Malaysian ringgit and Turkish lira were some of the biggest losers among developing nations’ currencies. Treasuries advanced as a four-day selloff in Japanese government bonds abated.
- World’s Largest Oil Hedge Set to Make Billions for Mexican State (Bloomberg) Mexico is on track to receive billions of dollars from its 2016 sovereign oil hedge, the first time it will reap the windfall two years in a row, according to data compiled by Bloomberg. The potential payout — after Mexico already got a record $6.4 billion in 2015 — is likely to sharpen the market’s attention to the Latin American nation’s effort to lock in prices for 2017. Mexico usually hedges in midsummer against a drop in oil through a series of deals with banks that in the past have included Goldman Sachs Group Inc. and JPMorgan Chase & Co.
- China July service sector growth eases, employment falls for first time in four months: Caixin PMI (Reuters) Growth in China’s services sector cooled in July, with weaker expansions in activity and new work prompting companies to shed staff for first time in four months as they looked to cut costs, a private survey showed on Wednesday. The findings contrast with a more upbeat official survey on Monday, raising concerns that China is still facing hurdles to its plans to transform the economy into one more reliant on domestic consumption than heavy industry and exports.
- Bitcoin worth $72 million stolen from Bitfinex exchange in Hong Kong (Reuters) Nearly 120,000 units of digital currency bitcoin worth about US$72 million was stolen from the exchange platform Bitfinex in Hong Kong, rattling the global bitcoin community in the second-biggest security breach ever of such an exchange. Bitfinex is the world’s largest dollar-based exchange for bitcoin, and is known in the digital currency community for having deep liquidity in the U.S. dollar/bitcoin currency pair.
- China’s state planner drops call for monetary easing from statement (Reuters) A research office at China’s top economic planner on Wednesday called for the central bank to cut interest rates and bank reserve requirements, but later removed the remarks in an updated statement posted on its website. The National Reform and Development Commission (NDRC) also removed a call for subsidies to help reduce inventories of unsold homes without any explanation for the change.
- Futures lower ahead of economic data (Reuters) U.S. stock index futures were lower ahead of a raft of corporate results and data, including a report on private-sector hiring. Futures were also pressured by U.S. crude prices, which remained below $40 per barrel amid oversupply fears.
- AIG profit beats estimates on lower costs, shares rise (Reuters) American International Group Inc (AIG.N), the largest commercial insurer in the United States and Canada, reported an operating profit that beat analysts’ estimate, driven by lower costs and strong underwriting during the quarter. Shares of the company, whose board also authorized an additional $3 billion share buyback program, were up 2.5 percent at $55.50 in extended trading on Tuesday.
Overnight markets
- Overview: US 10yr note futures are up 0.0354% at 132-19, S&P 500 futures are down -0.17% at 2149, Crude oil futures are up 0.86% at $39.85, Gold futures are down -0.07% at $1371.6, DXY is up 0.19% at 95.242.
US Economic Data
- 8:15 AM: ADP Employment Change, July, 179k, est. 170k (prior 172k, revised 176k)
- 9:45 AM: Markit US Services PMI, July F, est. 51.0 (prior 50.9)
Markit US Composite PMI, July F, (prior 51.5)
- 10:00 AM: ISM Non-Manf. Composite, July, est. 55.9 (prior56.5)
Canadian Economic Data
- There is no major economic data for 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, David Leclair-Legault
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230