Market Update
Tsys prices open NY higher, but well off 2am ET highs, after FX-tied buying in Asia was followed by UK drift. High-grade corporate bond issuance busy. US ADP sees 153’000 for December private Payrolls. Treasuries gain mildly on softer than expected ADP, 10Y note now is at 2.432%.
News headlines
Dollar Rally Stymied by China, Fed as Gold Climbs: Markets Wrap (Bloomberg) The dollar faced further headwinds as Chinese efforts to stem capital outflows and the Federal Reserve conspired to halt the strongest rally in the currency in more than a decade. Gold rose.
Oil prices rise as Saudi Arabia discusses supply cuts (Reuters) Oil prices rose on Thursday after Saudi Arabia started talks with customers about a reduction in crude sales to support a plan by OPEC to reduce global supply. The Organization of the Petroleum Exporting Countries promised in November to cut output to help prop up prices.
China’s yuan soars against dollar as liquidity tightens offshore (Reuters) China’s yuan soared against the U.S. dollar on Thursday following a sharp rise in the offshore spot rate as China worked to stem capital flows and stabilise the currency ahead of Donald Trump’s inauguration as U.S. president and the Lunar New Year.
Canadian, U.S. car sales hit record levels in 2016 (TheGlobeAndMail) Canadians and Americans wore out the showroom floors of car dealerships in 2016, driving auto makers to record sales years in both markets. Auto makers sold 1.95 million vehicles in Canada, the fourth consecutive year that sales have hit a record. The 2016 level was achieved despite a plunge in oil prices that sent sales tumbling in Alberta, the third largest market in the country
UK services sector grows at fastest pace for more than a year (TheGuardian) Britain’s services sector grew at the fastest pace for 17 months in December, according to a survey that has raised hopes for a strong end to 2016 for the economy. There was also a pick-up in new business and job creation, according to the poll of firms from the UK’s biggest sector, which includes banks, hotels and transport. But news that companies increased their prices at the fastest pace for more than five years will intensify worries over the weak pound stoking inflation in the months ahead and raises the prospect of interest rates going up this year.
Toronto Housing Has a Record Year Amid Supply Shortages (Bloomberg) Toronto’s housing market posted a record year in 2016 that saw double-digit price gains, tightening supply and the cost of an average home surpass C$700,000 ($526,355) for the first time. Sales figures released Thursday by the Toronto Real Estate Board show the city’s realtors sold C$82.6 billion worth of homes last year, an increase of almost C$20 billion from 2015. Unit sales rose 12 percent and prices increased by more than C$100,000 to an average C$729,922. That’s up 17 percent from last year — the largest annual gain since 1989.
Top Forecaster Sees Loonie Extending G-10’s Best Advance in 2017 (Bloomberg) The Canadian dollar will strengthen in 2017 as the country’s economy accelerates in the second half of the year and worries over U.S. President-elect Donald Trump’s trade policies fade, according to the most accurate forecaster of the currency.
Overnight markets
Overview: US 10yr note futures are up 0.1637% at 124-10, S&P 500 futures are down -0.15% at 2260.75, Crude oil futures are up 0.73% at $53.65, Gold futures are up 0.88% at $1175.5, DXY is down -0.42% at 102.27, CAD/USD is down 0% at 0.7519.
US Economic Data
| 8:15 AM | ADP Employment Change, Dec, 153k, est. 175k (prior 216k, revised 215k) |
| 8:30 AM | Initial Jobless Claims, Dec 31st , 235k, est. 260k (prior 265k, revised 263k) |
| Continuing Claims, Dec 24th, 2112k, est. 2045k (prior 2102k, revised 2096k) | |
| 9:45 AM | Markit US Services PMI, Dec F, est. 53.4 (prior 53.4) |
| Markit US Composite PMI, Dec F, (prior 53.7) | |
| 10:00 AM | ISM Non-Manufacturing Composite, Dec, est. 56.8 (prior 57.2) |
Canadian Economic Data
| 8:30 AM | Industrial Product Price, m/m, Nov, 0.3%, est. 0.5% (prior 0.7%) |
| Raw Materials Price Index, m/m, Nov, -2.0%, est. -1.8% (prior 3.3%) |
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