Market update
US tsys lower, curve steeper , US 10Y 2.025 (+3bps) as equities are higher while the tsy mkt continues to price out rate hikes this year. Odds of a 25bp hike at the Mar 16 meeting have been pared back to ~50% from 66% on Thursday pre nonfarm. Fed Rosengren, in an interview with MNI, said that a 2015 rate hike is still appropriate. Core Euro bonds lower led by UK 10Y gilts despite weaker UK service PMI. GOCs are lower, steeper, longs ~2bps wider , 10/30 @79. Provis weaker, Ont 46s trading down @113, 25s @ 104, negative tone stemming partly from news Ontario decided to pull Euro benchmark 10Y sale.
News headlines
- Euro-Area Growth Seen Slowing in Sign More Stimulus May Be Ahead (Bloomberg) The euro region’s economic recovery risks faltering after growth momentum eased in September, Markit Economics said. A Purchasing Managers’ Index for manufacturing and services fell to 53.6 in September from 54.3 in August, the London-based company said in a report on Monday. That’s below a Sept. 23 preliminary reading of 53.9. A print above 50 indicates expansion.
- Despite ‘weak’ jobs report, Fed’s Rosengren still sees 2015 rate hike (CNBC) Eric Rosengren still expects the Federal Reserve to raise interest rates this year despite what the head of the Boston Fed called a “weak” September jobs report, which could signal a more significant economic slowdown that delays the policy tightening.
- Glencore surges 70% on Viterra sale speculation (G&M) Shares of Glencore, the world’s biggest commodities trader, surged more than 70 per cent in Hong Kong trading and rose 20 per cent in early London trading on speculation that it is open to takeover offers and is close to selling its Canadian agriculture business.
- Suncor Energy Inc launches unsolicited offer to buy Canadian Oil Sands Ltd for $4.3 billion (FP) Suncor Energy Inc., Canada’s biggest energy company, made an unsolicited offer to acquire all outstanding shares of Canadian Oil Sands Ltd. for about $4.3 billion, taking advantage of plunging crude prices to add production in Alberta.
- National Bank forced to cut as many as 400 jobs as economy, investment risk takes toll (FP) National Bank of Canada will cut as many as 400 jobs, or 2.3 per cent of its workforce, as it seeks to reduce costs amid changes in technology and customer preferences, a person familiar with the plan said.
Overnight markets
- Overview: IG24 5Y 85.556/86.281 (-2.096), US 10yr note futures are down -0.16% at 129-04+, S&P 500 futures are up +0.73% at 1957.25, Crude oil futures are up +0.83% at 45.92, Gold futures are down -0.04% at $1136.2, DXY is down -0.07% at 95.767.
US Economic Data
- Markit US Services PMI for August (Final) is forecast at 55.6, equal to preliminary report.
- ISM non-manufacturing is forecast at 57.5 in September lower than August 59.0.
- Labor market conditions for September will be release at 10:00 and is forecasted at 1.4 after a 2.1 level in August.
Canadian Economic Data
- Bloomberg Nanos Canadian Confidence Index will be released today at 10:00am.
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