Market Update

US tsys moving higher after rangebound session, US 10Y 2.24(-3bps) reacting to BOE 6-2 decision to leave rates unchanged, UK gilts 5-6bps lower across the curve, chance of rate hike in Nov at 36.5% vs 47.5% prior to announcement, GBP down 0.67%. Carney did mention that further tightening was needed at some point, yet the mkt more focused on the downgrading to growth – 1.7% this year vs. 1.9% May forecast, 2018 lowered to 1.6% from 1.7% and 2019 unch at 1.8%. The Bank also said real wages will decline by 0.5% this yr.  In Canada, GOCs higher, 10Y 1.915%, close to yesterday morning’s 1.91% low, spreads ~1bp wider vs tsys. Provis opening  unch after closing 1bp tighter yest., Ont 27s 68/67.5 – reopened at 68 yest.

News headlines 

Europe Stocks Struggle as Euro Slips, Pound Falls: Markets Wrap (Bloomberg) European equities struggled for traction, erasing first a decline and then an advance as the recent run of positive earnings continued and the euro pared some of Wednesday’s jump. The dollar was firmer as traders await U.S. labor-market data.

BOE Cuts Growth Forecasts as Rate Kept at Record Low (Bloomberg) The downgrades, linked to Brexit, were enough for the majority of the Monetary Policy Committee to keep their cautious stance, with the vote for no change coming in as expected at 6-2. Ian McCafferty and Michael Saunders maintained their push for a 25 basis-point increase, which would reverse the rate cut put in place a year ago this week.

Hedge fund short covering lifts oil prices: Kemp (Reuters) In recent weeks short covering, rather than long building, has driven oil prices higher, which suggests fund managers are becoming less bearish about prices rather than more bullish. Hedge funds and other money managers continued to reduce their short positions in crude and refined fuels in the week to July 25, pushing prices higher.

Investor Einhorn sees cash burn at Tesla, sticks with short bet (Reuters) Billionaire investor David Einhorn, who has been hurt by his bet against Tesla Inc, said on Tuesday that the electric car maker is over-valued and that the company is not adequately capitalized.

S&P says new U.S. sanctions have no immediate impact on Russia’s ratings (Reuters) The new round of U.S. sanctions against Moscow has “no immediate implications” for Russia’s sovereign credit ratings, S&P Global Ratings said on Thursday.

Toronto Home Prices Suffer Worst Monthly Decline in 17 Years (Bloomberg) Home prices in Canada’s largest city posted their biggest monthly drop in at least 17 years in July and sales plunged as government efforts to cool the market and the near-collapse of a mortgage lender made buyers leery.

Overnight markets 

Overview: US 10yr note futures are up 0.112% at 126-07, S&P 500 futures are down -0.04% at 2472.5, Crude oil futures are up 0.44% at $49.81, Gold futures are down -0.36% at $1273.8, DXY is up 0.07% at 92.901, CAD/USD is up 0.19% at 0.794.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.253% 2 Year 1.351%
5 Year 1.536% 5 Year 1.804%
10 Year 1.918% 10 Year 2.239%
30 Year 2.344% 30 Year 2.817%

US Economic Data

7:30 AM Challenger Job Cu, y/y, est. -37.6% (prior -19.3%)
8:30 AM Initial Jobless Claims, Jul 29, 240k, est. 243k (prior 244k, revised 245k)
Continuing Claims, Jul 22, 1968k, est. 1958k (prior 1964k, revised 1965k)
9:45 AM Bloomberg Consumer Comfort Index, Jul 30,  (prior 48.6)
Markit US Service PMI, Jul F, est. 54.2 (prior 54.2)
Markit US Composite PMI, Jul F,  (prior 54.2)
10:00 AM ISM Non-Manf. Composite, Jul, 56.9 (prior 57.4)
Factory Orders, Jun, est. 3.0% (prior -0.8%)
Factory Orders Ex Transportation, Jun, (prior -0.3%)
Durable Goods Orders, Jun F, est. 0.0% (prior 6.5%)
Durable Ex Transportation, Jun F, (prior 0.2%)
Cap Goods Orders Nondef Ex Air, Jun F, (prior -0.1%)
Cap Goods Ship Nondef Ex Air, Jun F, (prior 0.2%)

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