05/05/2017

Market Update

Tsys moving higher despite stronger US payrolls (211k vs 190k) and a decline in the unemp rate to 4.4% and the underemployment rate the lowest since 2007. Yet AHE fell to 2.5% from 2.6% in Mar (revised from 2.7%) and participation rate fell to 62.9% from 63%. Tsys were well bid overnite on continued weakness in commodities, esp with crude falling below $45 for the first time since the Nov OPEC cuts. GOCs giving back (~1bp) of outperformance vs tsys after Cdn employment rose 3.2k last month vs 10k exp with the unemp rate fell to 6.5%.Yest GOCs closed 3-4bps tighter across the curve, the fifth straight day of narrowing, with 2s/10s ~2 bps steeper over the week.

News headlines 

Dollar Gains, Oil Pares Loss Before Payrolls Data: Markets Wrap (Bloomberg) The dollar climbed, heading for its biggest weekly gain in a month, as investors await a U.S. employment report. Oil rebounded after plunging below $45 a barrel and European shares declined.

OPEC, non-OPEC see need to extend supply-cut pact: Saudi governor (Reuters) OPEC and other countries that agreed to cut crude production are converging on the need to extend the pact beyond June to help to clear a supply glut, Saudi Arabia’s OPEC governor said on Friday.

China April data to show solid growth, but high debt poses risks (Reuters) A looming flurry of Chinese data is expected to show the world’s second-largest economy maintained solid momentum in April after a surprisingly robust first quarter, but the pace is seen tapering off as Beijing turns the screws on debt risks and a hot property sector.

Inside Canada’s Push to Contain the Fallout From Home Capital (Bloomberg) As Home Capital Group Inc.’s shares were in freefall last week, the fight to stop the bleeding at the Canadian mortgage lender had already begun. It was late Tuesday night, Ottawa time, when federal Finance Minister Bill Morneau received his first briefing from department officials just as he was boarding a plane in Beijing to head home.

Greece’s Tsipras talks up bailout deal with lawmakers (Reuters) Greek Prime Minister Alexis Tsipras sought on Friday to bring his leftist Syriza party on board to approve a deal reached with international lenders, sweetening the pot by saying any above-target savings this year would go to the Greek people.

Japan finance minister Aso says yen is a stable currency (Reuters) Japanese Finance Minister Taro Aso said on Friday the yen was a “stable” currency and could contribute to promoting financial stability in Asia. Aso was referring to a proposal Japan made earlier in the day to launch bilateral foreign exchange swap arrangements with Southeast Asian nations, enabling Tokyo to provide yen funds to these countries in times of financial stress.

Overnight markets 

Overview: US 10yr note futures are down -0.025% at 125-05, S&P 500 futures are up 0.18% at 2389.75, Crude oil futures are down -0.18% at $45.44, Gold futures are up 0.21% at $1231.2, DXY is down -0.06% at 98.736, CAD/USD is up 0.14% at 0.7263.

US Economic Data

8:30 AM Change in Nonfarm Payrolls, Apr, 211k,  est. 190k (prior 98k, revised 79k)
  Change in Private Payrolls, Apr, 194k, est. 190k (prior 89k, revised 77k)
  Change in Manufacturing Payrolls, Apr, 6k, est. 10k (prior 11k, revised 13k)
  Unemployment Rate, Apr, 4.4%, est. 4.6% (prior 4.5%)
  Average Hourly Earnings, m/m, Apr, 0.3%, est. 0.3% (prior 0.2%, revised 0.1%)
  Average Hourly Earnings, y/y, Apr, 2.5%, est. 2.7% (prior 2.7%, revised 2.6%)
3:00 PM Consumer Credit, Mar, est. $14.000b (prior $15.206b)

Canadian Economic Data

8:30 AM Net Change in Employment, Apr, 3.2k, est. 10.0k (prior 19.4k)
  Unemployment Rate, Apr, 6.5%, est. 6.7% (prior 6.7%)
  Full Time Employment Change, Apr, -31.2, (prior 18.4)
  Part Time Employment Change, Apr, 34.3, (prior 1.0)
  Participation Rate, Apr, 65.6, (prior 65.9)
10:00 AM Ivey Purchasing Managers Index, Apr, (prior 61.1)

 

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