cti2015header-morning comments web

Market update

US tsys lower despite weaker non-farm payrolls 151K vs 192K  with Dec revised lower 262K from 292K, but AHE , unemp rate & part rate all stronger., US 10Y 1.86 (+, crude up 1.1% @ 32.07, Asian stocks lower o/n. Core Euro bonds lower led by 10Y UK gilts, yields on shorter bonds close to Wed record lows.  GOCs lower after mixed empl data – employment lower yet full time jobs +5.6K , part time -11.3K while the unemp rate rose 0.1% to 7.2%. Provis unch after early buying failed to move spds tighter despite higher equities/crude.

News headlines

  • Obama $10-Per-Barrel Oil Tax Lands With Thud in Congress (Bloomberg) President Barack Obama will propose a $10 per barrel tax on oil in his fiscal 2017 budget plan, an idea that received a chilly reception in the Republican-controlled Congress that oversees spending. With the proceeds targeted to transportation and climate initiatives, the proposal announced Thursday deepens Obama’s environmental credentials and signifies his ambitions to aggressively push action on climate change during his final year in office.
  • Pressure on Cameron as poll suggests voters edging towards Brexit (TheGuardian) A new poll has suggested more Britons favour leaving the EU over staying in, with 45% supporting “Brexit” compared with 36% against, while a fifth remain undecided.
  • Goldman Sees Pound Tumbling by as Much as 20% on `Brexit’ (Bloomberg) The pound could fall as much as 20 percent if Britain quits the European Union, according to Goldman Sachs Group Inc. The U.S. investment bank doesn’t expect U.K. citizens to vote to leave the EU in the referendum that may be held as soon as June. But if they did, it predicts sterling could drop to $1.15-$1.20 — levels last since in 1985. It was at $1.4638 as of 9:25 a.m. London time on Thursday.
  • Dollar Set for Biggest Weekly Loss Since 2009 Before Jobs Data (Bloomberg) The dollar is headed for its biggest weekly decline since 2009, and Friday’s payrolls report is unlikely to offer much in the way of redemption.
  • S. Panel Says Yuan Will Erode, Not Challenge, Dollar Dominance (Bloomberg) China’s yuan, which earned reserve status from the International Monetary Fund last year, enjoys growing prominence as an international currency that will diminish the dollar’s role in trade and transactions over time, according to a U.S. congressional panel.
  • K. Poll Shows `Out’ Campaign Leads by 9 Points After Tusk Deal (Bloomberg) The campaign to take Britain out of the European Union led by 9 percentage points in one survey after voters had their first chance to assess the changes Prime Minister David Cameron aims to secure in the functioning of the 28-nation bloc.
  • Indian Central Bank Calls for Joint Action to Calm Markets (Bloomberg) India’s central bank is calling for coordinated action by monetary authorities to address the turbulence that’s roiling foreign-exchange markets this year.
  • Ukrainian Bonds Plummet as Government Unity Efforts Stumble (Bloomberg) Ukrainian government bonds plunged as efforts faltered to shore up the ruling coalition after a key reformer quit and accused presidential party members of corruption
  • BNP Paribas to shrink investment banking division (FT) BNP Paribas said it would shrink the riskiest parts of its investment bank in the face of tougher regulation as France’s largest bank by assets reported a more than 50 per cent fall in net income in the fourth quarter. The Paris-based lender plans to cut its assets weighted by risk by 11 per cent, or about €20bn. It will reduce its exposure to fixed income, while doubling down on fee-generating businesses that use less capital, such as securities services and cash management.
  • ArcelorMittal launches $3-billion share issue as profit plunges (TheGlobeandMail) ArcelorMittal, the world’s largest steel maker, launched plans on Friday to raise $3-billion from a share issue to reduce debt, as it continues to suffer from the Chinese industry’s overcapacity which it says has driven down world prices. ArcelorMittal’s share price has dropped 60 per cent in the past 12 months, cutting the group’s market value to just €6.2-billion ($6.94-billion). The shares were down a further 7.5 per cent in early trading on Friday, making them by far the worst performer in the European FTSEurofirst300 index.
  • LinkedIn Shares Plummet On Weak Forecast (Forbes) LinkedIn shares plummeted as much as 29% in after-hours trading after the professional networking site on Thursday released forecasts for the first quarter and all of 2016 that were well below analysts’ estimates.
  • News Corp’s revenue falls for fourth quarter in a row (Reuters) News Corp’s revenue fell for the fourth quarter in a row, hurt by a stronger dollar and dwindling advertising revenue in its core news and information business, which includes the Wall Street Journal. News Corp, controlled by media mogul Rupert Murdoch, said revenue at its news and information unit declined 8.1 percent in the second quarter. The unit, which accounted for about 65 percent of total revenue, also houses Dow Jones and the New York Post. Here, ad revenue fell 12 percent, mainly due to weakness in print ads.


Overnight markets 

  • Overview: US 10yr note futures are down -0.16% at 130-2, S&P 500 futures are down -0.12% at 1905.5, Crude oil futures are down -0.44% at $31.58, Gold futures are down -0.74% at $1148.9, DXY is up0.61% at 97.063.

US Economic Data 

  • The Trade Balance number came in weaker than expected at a level of 43.36 Billion, and down 0.83 Billion from the previous month.
  • The Unemployment Rate number was better than expected at 4.9% and down 0.1% from last month.
  • The Change in Nonfarm Payrolls was release at a level of 151k weaker than expected, down 111k from the previous month.
  • The Change in Manufacturing Payrolls number came in at 29k stronger than expected and was up 16k from the previous month
  • Average Hourly Earnings MoM growth number came in stronger than expected by the analysts at a level of 0.5% and up 0.5% from the prior month

Canadian Economic Data 

  • The Unemployment Rate number was worse than expected at 7.2% and up 0.1% from last month.
  • The Net Change in Employment number was release at a level of -5,7k down 28.5k from last month.


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