Market Update
US tsys higher, accelerating higher in early NA trade with EGBS, tsy yields 2-4bps lower led by the 10Y @ 2.42 (-4.1bps). Tsys outperforming European govt bonds despite concerns over article 50 debate, widening in EU peripherals, with bund-BTP touching 200bps. In Japan, JGBs fell, yields 1-3bps higher with the curve 2bps steeper – Japan wages rose at the fastest pace since 2010 last yr according to data released Friday. GOCs higher in line with tsys, provis unch with new Ont 10Y (2027) expected this week. The BOC auctions $400mln in 2047 RRBs this Wed with long breakevens under some pressure since y/e.
News headlines
Currencies, Bonds Underscore Rising Political Risk: Market Wrap (Bloomberg) Caution crept through European bonds and currencies after prospective French presidential candidate Marine Le Pen unveiled a manifesto pledge to take her country out of the euro, underscoring political risk in the world’s biggest single market. Oil and gold tested highs.
Oil steadies as Iran and OPEC offset by U.S. drilling rebound (Reuters) Oil steadied near $57 barrel on Monday as OPEC supply cuts and rising tensions between the United States and Iran were countered by ample inventories and signs that higher prices will revive U.S. output.
Euro fades in face of French election risks (Reuters) The euro fell around half a percent on Monday as concerns over French politics ahead of presidential elections set for April and May drew investors’ focus back to a year of political risks to Europe’s established order. The dollar was broadly steadier after a poor set of wages data on Friday quashed speculation of a near-term rise in U.S. interest rates and sealed the currency’s fourth straight weekly fall, its worst start to a year in three decades.
German Factory Orders Surge Most Since 2014 on Investment (Bloomberg) German factory orders rose the most in two and a half years in December amid a surge in investment-goods demand, suggesting that the strong run of Europe’s largest economy at the end of the year is set to continue.
China services sector extends strong growth in January but pace eases: Caixin PMI (Reuters) Growth in China’s services sector remained robust in January as companies reported a solid increase in orders, though the pace of expansion eased from the previous month, a private business survey showed.
Scottish independence vote may be decided ‘within weeks’ – Sturgeon ally (Reuters) A decision on calling a new Scottish independence referendum could be made within weeks, said a Scottish Greens lawmaker whose party is a key ally of Scottish First Minister Nicola Sturgeon.
Overnight markets
Overview: US 10yr note futures are up 0.4526% at 124-27, S&P 500 futures are down -0.15% at 2287.5, Crude oil futures are down -0.3% at $53.67, Gold futures are up 0.79% at $1230.4, DXY is up 0.26% at 100.13, CAD/USD is up 0.37% at 0.765.
US Economic Data
There is no major economic news for today.
Canadian Economic Data
Bloomberg Nanos Confidence, Feb 3, (prior 56.1)
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