cti2015header-morning comments web

US tsys are sharply higher on weaker European/Asian stocks, S&P futures are -15pts, lower crude, US 10Y 1.723 (-4bps). Japanese yen rose to a 17 month high while the Nikkei fell 2.5% – the sixth straight decline.  Core Euro bonds also sharply higher led by 10Y UK gilts, yields at one month lows with the 10Y bund yield below 0.10% for the first time since April 2015.  Bunds well bid after weak Feb factory orders, Eurozone service PMI. The latest JPM Tsy Client Survey showed the most net longs since Nov 1st at 23%. GOCs higher led by the 10Y  which is 4bps better on the curve in a directional move with 10Y yields. Provis opening wider, Ont 46 108/07 (106.5),Ont 26 96/95 (94.5), QC 48s 110/109.5.

News headlines

  • Yen Rises With Bunds as Economic Concerns Mount; Stocks Decline (Bloomberg) The yen jumped to a 17-month high and government bonds climbed as increasing concern that global economic growth is faltering stoked demand for haven assets. Stocks fell around the world, along with emerging-market currencies. Japan’s yen rose against all 16 of its major peers, while yields on 10-year German bonds dropped to the lowest in a year. All 30 stocks in Germany’s DAX Index fell after an unexpected drop in factory orders
  • Norway Frees Wealth Fund to Add $17 Billion in Real Estate (Bloomberg) Norway proposed letting its sovereign wealth fund raise real estate holdings by about $17 billion, while rejecting a call to expand into infrastructure projects. The upper limit on real estate investments for the $850 billion fund, the world’s biggest, should be raised to 7 percent from 5 percent, the Finance Ministry said on Tuesday. The real estate assets will also be separated from the overall portfolio and “be included in the existing framework for deviations,” according to the ministry.
  • Euro Area Growth Stays ‘Sluggish’ as Markit Index Revised Lower (Bloomberg) The euro-area economy grew slower than initially anticipated at the end of the first quarter, according to Markit Economics, which revised down a key index of activity. Markit said its composite Purchasing Managers Index rose to 53.1 in March from 53 in February. While that’s above the 50 level that divides expansion from contraction, it’s below the initial reading of 53.7 published March 22.
  • Fed’s Evans says market more pessimistic on U.S. rate hikes (Reuters) Financial markets are more pessimistic than the U.S. central bank in their pricing of U.S. interest rate hikes, Chicago Fed President Charles Evans said on Tuesday. « Market expectations are pricing in a 20 percent likelihood of things deteriorating from here, » said Evans during an investor conference in the Asian financial hub, citing recent surveys. « I don’t have that outlook. In general, financial market expectations are more pessimistic than ours. »
  • Saudi Arabia to sign $21.5 billion energy, development deals with Egypt: sources (Reuters) Saudi Arabia is expected to sign a $20 billion deal to finance Egypt’s petroleum needs for the next five years and a $1.5 billion deal to develop its Sinai region, two Egyptian government sources told Reuters on Tuesday. The agreements are tabled to be signed on Thursday during a visit to Cairo by Saudi Arabia’s King Salman, a rare foreign trip.
  • IMF chief ramps up call for global action as growth risks increase (Reuters) The global economy’s already modest prospects will decline further unless authorities take stronger action to boost growth, the head of the IMF warned on Tuesday, saying the Fund would cut its headline forecasts next week. Christine Lagarde said China’s shift to an economic model based more on domestic demand, stubbornly low commodity prices and tighter funding conditions in some countries had all clouded the outlook.
  • Oil Holds Near Month-Low as U.S. Supplies Seen Expanding Glut (Bloomberg) Oil held near the lowest in a month before U.S. government data forecast to show an increase in crude stockpiles to the highest level in more than eight decades. Futures fell as much as 1.3 percent in New York after dropping 6.9 percent in the previous two sessions. Inventories in the U.S., the world’s biggest oil user, climbed by 2.85 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. That will be an eighth weekly advance.
  • Hong Kong shares fall despite mainland gains, energy stocks tumble (Reuters) Hong Kong’s main stock index posted its biggest loss in nearly six weeks on Tuesday, touching a one-month low, as the energy sector tumbled against a backdrop of slumping crude oil prices and mixed messages on the outlook for U.S. monetary policy. The Hang Seng Index had its worst day since Feb. 25, dropping 1.6 percent to 20,177.00. The China Enterprises Index lost 1.9 percent, to 8,679.04 points.
  • CMHC pushing for comprehensive national strategy this year to ‘reduce housing need’ (Financial Post) Canada’s housing agency will begin a push for a national housing strategy to support affordable housing. “This year, CMHC will work with other federal colleagues to undertake broad-based consultations on a national housing strategy,” Evan Siddall, chief executive officer of Canada Mortgage & Housing Corp., the country’s national housing agency, said in the text of a speech in Whitehorse, Yukon
  • Air Canada will firm up Bombardier Inc CSeries order within ‘weeks,’ CEO says (Financial Post) Air Canada will firm up its CSeries order within “weeks,” but some level of government funding will still be necessary to help Bombardier Inc. succeed, the airline’s chief executive said Monday. “It’s coming together pretty quickly now,” Air Canada CEO Calin Rovinescu told reporters when asked how soon the airline will turn its letter of intent into a firm order.


Overnight markets 

  • Overview: US 10yr note futures are up 0.3353% at 130-29, S&P 500 futures are down -0.84% at 2040.25, Crude oil futures are down -0.81% at $35.41, Gold futures are up 1.53% at $1237.9, DXY is up 0.19% at 94.694.

US Economic Data 

  • Markit US Services PMI will be released at 9:45 AM
  • Markit US Composite PMI will be released at 9:45 AM
  • Non-Manufacturing ISM composite will be released at 10:00 AM

 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