Tsys mixed, curve flatter with 10Y ~2bps lower after payrolls came in weaker than exp for April (160k vs 200k), 10Y 1.72 (-2bps) thou avg hourly earn were in line @ 0.3% m/m. Tsy yields falling thru the o/n session in follow thru to yest rally as China stocks 3.0% lower, the CRB index falling to the lowest in a week. The Nikkei fell 0.25%, Japan April Service PMI fell to 49.3 vs 50 in March with the composite PMI at a two-year low. Sharp fell 8.5% as losses expected to nearly double this FY to 300bln. GOCs higher after Cdn empl fell 2.1k last month after a 40.6k increase in Apr, the unem rate at 7.1% vs 7.2%. Provis trading down since payrols , Ont 26s @91.5, spds have held in fairly well this week considering the rally in cdas, ~2bps wider vs 20bp rally in 10Y GOCs – lack of doenstic supply & upcoming June extension likely a factor keeping spreads in.
- Stocks Drop as Markets Revisit 2016 Doldrums Before Payroll Data (Bloomberg) The worst week for financial markets since the turmoil at the start of the year showed little sign of improvement as pessimism over global-growth prospects set the stage for U.S. jobs data. The MSCI All-Country World Index extended its biggest weekly decline since February as corporate earnings failed to reassure investors. Emerging markets headed for the worst week in four months with Turkey, Poland and South Africa providing focal points for selling. U.S. crude oil sank, set for its first weekly drop in more than a month and industrial metals were poised for their biggest weekly loss since 2013. Bonds and the dollar have been the main beneficiaries, with a gauge of the U.S. currency headed for its best week this year, while German bunds advanced.
- Oil falls as investors cash in on month-long gains (GlobeandMail) Oil prices fell on Friday as investors cashed in on a 20-per cent rise over the past month, outweighing the impact of crude production cuts in Canada where a huge wildfire has disrupted oil sands operations. Oil prices were down around one per cent in early European trading, with global benchmark Brent prices set for their first weekly loss in five weeks. “Currently prices are falling even with only few bearish fundamentals,” said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.
- Fitch downgrades Brazil, Meirelles calls for credible targets (Reuters) Fitch Ratings downgraded Brazil’s sovereign debt further into junk territory on Thursday, citing a deeper-than-expected economic contraction and changing fiscal targets that have undermined credibility. Fitch downgraded Brazil to BB from BB+ with a negative outlook a week before a Senate vote that is expected to lead to the ouster of unpopular leftist President Dilma Rousseff.
- Italy prosecutor probes Deutsche Bank for possible market manipulation – source (Reuters) Deutsche Bank (DBKGn.DE) is under investigation in Italy for suspected market manipulation relating to the sale of Italian government bonds in 2011, an investigative source said on Friday. A prosecutor in southern Italy is investigating the German bank’s sale of 7 billion euros (6 billion pounds) worth of Italian state debt as Italy approached a debt crisis that eventually brought down the government of former Prime Minister Silvio Berlusconi.
- China regulator studying impact of overseas-listed firms relisting in China (Reuters) China’s securities regulator said it is analyzing the potential impact of overseas-listed Chinese companies coming home to relist on mainland exchanges, potentially bad news for tech firms trying to come home and cash in on high valuations. The valuation gap between the domestic and overseas market and speculation on shell companies should be paid attention to, Zhang Xiaojun, a spokesman for the China Securities Regulatory Commission (CSRC), said at a weekly briefing on Friday, according to remarks posted on CSRC’s official Weibo microblog.
- TransCanada gets final permits for Coastal GasLink pipeline to Kitimat (GlobeandMail) TransCanada Corp. says it has secured the final permits needed to start construction and operation of its proposed Coastal GasLink pipeline. The company said Thursday that the B.C. Oil and Gas Commission issued the last two of 10 permits needed and it now is awaiting a final investment decision from LNG Canada before starting construction.
- ‘Paralyzing Volatility’ Means Trouble for Wall Street Giants (Bloomberg) There’s plenty of volatility, but what happened to the volume? From stocks to currencies and bonds, the upswing in turbulence to start the year is chasing all but the bravest traders from financial markets. Despite the recent rebound in U.S. equities, volume in the S&P 500 Index is down 23 percent. Speculative bets on the direction of currencies have also dropped to the lowest in two years, while average daily trading among dealers in U.S. Treasuries is close to a seven-year low.
- Overview: US 10yr note futures are up 0.0717% at 130-27, S&P 500 futures are down -0.46% at 2034.5, Crude oil futures are down -1.31% at $43.74, Gold futures are up 1.85% at $1295.8, DXY is down -0.23% at 93.567.
US Economic Data
- 8:30 AM: Change in Nonfarm Payrolls, April, 160k, est. 200k (prior 215k)
- Unemployment Rate, April, 5.0%, est. 4.9% (prior 5.0%)
- Average Hourly Earnings, m/m, 0.3%, est. 0.3% (prior 0.3%, revised 0.2%)
Canadian Economic Data
- 8:30 AM : Net Change in Employment, April, -2.1k, est. 1k (prior 40.6k)
- Unemployment Rate, April, 7.1%, est. 7.2% (prior 7.1%)
- 10:00 AM : Ivey Purchasing Managers Index (s.a), April, est. 52.3 (prior 50.1)
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