Market update
US tsys trading sharply lower after ECB decision, Draghi press conference, US 10Y 2.223 (+4.4bps), curve ~3bps steeper. Core European bonds sharply lower as well, 10Y bunds +10bps @ 0.57%. ECB decision to cut deposit rates by 10bps less than some had expected, Draghi sounding bullish in press conference saying policy has been effective, recovery is ongoing, oil prices supportive for household income. GOCs lower, spds ~1bp narrower vs tsys on the pullback, 10s ~4bps cheaper on the curve, 10s/30s another 1.5bp flatter seems like left over buying from Dec 1st started yest. Telus in the mkt with 10 & 30Y @ ~220/275 – looks like at least a 15bp concession on 10s.
News headlines
- ECB slices key interest rate to new historic low (FT) The European Central Bank has taken interest rates in the eurozone to a new historic low, pushing its deposit rate deeper into negative territory in an attempt to bolster the region’s tepid recovery.
- ECB pushes deposit rate deeper into negative territory (CNBC) The European Central Bank cut a key interest rate in a much-anticipated move at its monthly policy meeting, with further sweeping changes expected to be announced at its press conference later on Thursday.
- Oil speculators risk ‘short squeeze’ if impulsive Saudi Prince throws OPEC surprise (Telegraph) Hedge funds have taken their bets. The market is convinced that Saudi Arabia will ignore the revolt within OPEC at a potentially explosive meeting on Friday, continuing to flood the global markets with excess oil.
- S&P downgrades raft of US banks (FT) Eight of the biggest US banks have been downgraded by Standard & Poor’s, as the credit rating agency judged that the likelihood of federal government support in a future crisis had dimmed.
- Restructuring charges drag down CIBC’s profit; boosts dividend (G&M) CIBC reports its net income for the fourth quarter was $778-million, a 2.8 per cent decline from the same time last year due to higher restructuring costs at the corporate level.
Overnight markets
- Overview: IG24 5Y 79.021/79.774 (+0.698), US 10yr note futures are down -0.31% at 126-10+, S&P 500 futures are down -0.22% at 2077.0, Crude oil futures are up +1.80% at 40.66$, Gold futures are down -0.02% at $1053.6, DXY is down -0.40% at 99.598.
US Economic Data
- Challenger job cuts came in at -13.9% YoY in November, compared to prior month -1.3% increase.
- Initial jobless claims came in at 269K for the week ending November 28th, equal to expectations (269K) and higher than prior week (260K).
- Continuing claims increased to 2161K from 2155K and was lower than expected (2190K).
- Markit US Services PMI for November (Final) is forecast at 56.5, equal to preliminary report.
- ISM non-manufacturing is forecast at 58.0 in November lower than October 59.1.
- Factory orders are expected at 1.4% MoM in October fallowing a -1.0% decrease in September.
- Final revisions to Durable goods orders and Nondefense capital goods for October will be release at 10:00.
Canadian Economic Data
- There is no major economic data 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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230