Market update

US Tsy lower/ curve steeper after brief jump on weaker ADP (185 vs 215) as stock futures rise on no go Fed. Fed Powell had said there was no decision on Sep rate hike and that this Friday’s jobs report is key. Fed fund futures pricing in ~50% odds of rate hike in Sep vs 40% last week after Fed Lockhart comments yest. Euro stocks up 1.5% led by gains in materials, crude up 1.5%. Core Euro bond yields sharply higher despite weaker EU retail sales. In Canada, GOCs are lower, spds unch vs tsys, 1bp tighter in longs. Yest Cda closed 5-7 bps tighter vs tsys in the aft selloff, curve maintain a flattening bias… Provis opening unch, Ont45s 88.5, Ont 45/25 bx 11.8/11.4 – expectations of a long Alberta deal.

News headlines

  • China Services Sector Shows Strength (WSJ) China’s services sector showed continued strength in July, a private survey showed Wednesday, cushioning persistent problems in manufacturing in the world’s second-largest economy.
  • Dollar and short-term Treasury yields eye fresh highs (FT) The dollar and short-term Treasury yields are eyeing multi-year highs as traders increase bets of a US interest rate rise next month.
  • All eyes on sterling’s ‘Super Thursday’ (FT) The Old Lady of Threadneedle Street’s “unreliable boyfriend” is turning over a new leaf, catching the attention of the currencies market. Mark Carney, the Bank of England’s governor, was given the moniker last summer amid criticism about the central bank’s inconsistent message, via forward guidance, for the UK interest rate outlook.
  • Alberta forecasts deficit in the range of $5.4-billion (G&M) Alberta’s deficit will be “in the range” of $5.4-billion next year, Finance Minister Joe Ceci said Tuesday, sticking to a spring forecast even as skidding oil prices prompt deeper cuts in the energy sector.

Overnight markets

  • Overview: IG24 5Y 71.5/71.8 (-0.6), US 10yr note futures are down -0.20% at 127-00+, S&P 500 futures are up +0.85% at 2100.75, Crude oil futures are up +1.31% at 46.34, Gold futures are down -0.16% at $1089.0, DXY is down -0.10% at 97.833.

US Economic Data

  • MBA mortgage applications came in this morning at 4.7% for the week ending July 31st, versus prior week 0.8% increase.
  • ADP employment change came in at 185K in July compared to 229K in June (Expected 215K).
  • Trade balance widened to -$43.80B in June compared to previous month (-$40.9B).
  • Markit US Services PMI for July (Final) is forecast at 55.2, equal to the preliminary report.
  • ISM non-manufacturing is forecast at 56.2 in July a tad higher than June 56.0.

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