Market update
US Tsys rising with EGBs after Draghi increases QE buying cap, revises down GDP/inflation Eurozone forecast data, US 10Y 2.157 (-2.7bps). Tsys basically unch o/n with little reaction to uptick in claims, lower trade deficit .In Canada, GOCs are higher with tsys, curve unch. Provis open unch, BC 48 issue at 94 yest (6 thru Onts) was so-so, expectations of further supply keeping a lid on spd tightening despite better tone in equities/credit.
News headlines
- ECB seen cutting inflation outlook, hinting at more policy action (Reuters) The European Central Bank is set to cut its inflation forecasts on Thursday but hold back from concrete policy action, promising only to beef up its bond-buying program if growth and inflation prospects weaken further.
- Eurozone’s manufacturing enjoys strong August (FT) The eurozone’s manufacturing sector continued to grow in August, as ongoing expansion in Germany, Italy, Spain, the Netherlands, Austria and Ireland offset the continuing contractions in France and Greece.
- Swedish Krona Jumps as Riksbank Holds Off on Additional Stimulus (Bloomberg) Sweden’s krona climbed to a six-week high versus the euro after the nation’s central bank refrained from easing monetary policy and signaled the unprecedented stimulus it’s already doing is helping steer the economy out of a deflationary trap.
- S. Treasury’s Lew says China will be held accountable on currency (Reuters) The Obama administration on Wednesday urged China to be clear about its intentions when it changes currency policies.”They need to understand that they signal their intentions by the actions they take and the way they announce them,” U.S. Treasury Secretary Jack Lew told network CNBC in an interview ahead of a Group of 20 meeting that Chinese officials will attend.
Overnight markets
- Overview: IG24 5Y 81.35/81.85 (-0.9), US 10yr note futures are up +0.25% at 127-15, S&P 500 futures are up +0.58% at 1958.25, Crude oil futures are down -0.06% at 46.22, Gold futures are down -0.94% at $1123.0, DXY is up +0.43% at 96.244.
- US BANK CDS (5yr): BAC 79/83 (+0), GS 96/100 (+0), MS 87/91 (-1), C 89/93 (+0), JPM 79/83 (+0), WFC 58/62 (+0)
US Economic Data
- Challenger job cuts came in at 2.9% YoY in August, compared to prior month 125.4% increase.
- Initial jobless claims came in at 282K for the week ending August 29, higher than expected (275K) and prior week (270K).
- Continuing claims decreased to 2257K from 2266K but slightly higher than expected (2253K).
- Trade balance tightened to -$41.86B in July compared to previous month (-$45.21B).
- Markit US Services PMI for August (Final) is forecast at 55.0, 0.2 point lower than preliminary report.
- ISM non-manufacturing is forecast at 58.2 in August lower than July 60.3.
Canadian Economic Data
- Int’l merchandise trade improved to -$0.59B in July from a revised deficit of -$0.81B in June and better than expected (-$1.20B).
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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230