Market Update
Tsy & GOC yields 2-4bps higher before US & Cdn employment data, US 1.595% (+3.5bps), S&P futures +13, crude 55.45 (-1.5%). China injected $126bln into the economy by lowering the amount of reserves banks are required to hold, hoping banks will in turn increase lending. China’s Shanghai Comp had risen 0.5% or 3.9% wk/wk before the stimulus announcement. In Canada, GOCs lower in line with tsys, 10Y 1.30% a two-week high. Yest BOC deputy Schembri reiterated the Bank’s neutral, patient approach with regards to rate cuts, saying that ‘in contrast to the global economy Canadian data since July have surprised to the upside. ‘Risk-on’ spurred a wave of corporate issuance in the US & Cdn markets, $74bln in the US a new weekly record. BCE issued $550mln 10Y @ 165 (170 +/-5 guidance), 10% fills reported.
News headlines
Stock futures gain ahead of U.S. jobs report (Reuters) U.S. stock index futures edged higher on Friday ahead of a crucial jobs report and as China rolled out a stimulus plan to shore up its flagging economy.
CANADA STOCKS-TSX futures little changed ahead of monthly jobs data (Reuters) Futures for Canada’s main stock index were little changed on Friday as investors stayed on the sidelines ahead of jobs data in Canada and the United States.
China cuts banks’ reserve ratios, frees up $126 billion for loans as economy slows (Reuters) China’s central bank said on Friday it was cutting the amount of cash that banks must hold as reserves for the third time this year, releasing 900 billion yuan ($126.35 billion) in liquidity to shore up the flagging economy.
Bank of Canada says economy resilient, U.S.-China dispute may drag on (Reuters) The Canadian economy is showing “a welcome degree of resilience” to negative shocks, a senior Bank of Canada official said on Thursday, even as he suggested the U.S.-China trade war could drag on, hampering global growth.
Bank of Canada remains defiant, still doesn’t see case for cut (BNN) The Bank of Canada held firm to its narrative they are prepared to defy any global monetary policy easing and won’t be in any rush to cut interest rates unless they see clear signs of economic deterioration at home.
U.S. shale firms cut budgets, staff as oil-price outlook dims (Reuters) Oil producers and their suppliers are cutting budgets, staffs and production goals amid a growing consensus of forecasts that oil and gas prices will stay low for several years.
Explainer: ECB weighs stimulus options to boost ailing economy (Reuters) The European Central Bank is all but certain to approve new stimulus measures on Sept. 12 to boost an ailing economy, but the composition of its package is far from clear as a rift has opened between hawkish northern European policymakers and doves from the south.
Slower U.S. job growth expected, but enough to support economy (Reuters) U.S. job growth likely slowed further in August, but the pace of gains probably remains sufficient to keep the economy expanding moderately amid rising threats from trade tensions and weakness overseas that have left financial markets fearing a recession.
Market Overview: US 10yr note futures are down -0.262% at 130-31, S&P 500 futures are up 0.49% at 2986.5, Crude oil futures are down -1.55% at $55.43, Gold futures are down -0.84% at $1512.7, DXY is up 0.06% at 98.469, CAD/USD is down -0.03% at 0.7562.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.491% | 2 Year | 1.564% |
| 5 Year | 1.332% | 5 Year | 1.471% |
| 10 Year | 1.3% | 10 Year | 1.599% |
| 30 Year | 1.535% | 30 Year | 2.079% |
US Economic Data
| 08:30 AM | Change in Nonfarm Payrolls, Aug Survey: 160k Prior: 164k |
| Change in Private Payrolls, Aug Survey: 150k Prior: 148k | |
| Change in Manufact. Payrolls, Aug Survey: 5k Prior: 16k | |
| Unemployment Rate, Aug Survey: 3.70% Prior: 3.70% | |
| Average Hourly Earnings MoM, Aug Survey: 0.30% Prior: 0.30% | |
| Average Hourly Earnings YoY, Aug Survey: 3.00% Prior: 3.20% | |
| Average Weekly Hours All Employees, Aug Survey: 34.4 Prior: 34.3 | |
| Labor Force Participation Rate, Aug Survey: — Prior: 63.00% | |
| Underemployment Rate, Aug Survey: — Prior: 7.00% |
Canadian Economic Data
| 08:30 AM | Net Change in Employment, Aug Survey: 20.0k Prior: -24.2k |
| Unemployment Rate, Aug Survey: 5.70% Prior: 5.70% | |
| Hourly Wage Rate Permanent Employees YoY, Aug Survey: 4.50% Prior: 4.50% | |
| Full Time Employment Change, Aug Survey: 17.5 Prior: -11.6 | |
| Part Time Employment Change, Aug Survey: 7.0 Prior: -12.6 | |
| Participation Rate, Aug Survey: 65.60 Prior: 65.60 | |
| 10:00 AM | Ivey Purchasing Managers Index SA, Aug Survey: — Prior: 54.2 |
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, Émile Bordeleau
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230