cti2015header-morning comments web

Market Update

  • US tsys opening higher, curve slightly flatter, US 10Y 1.595 (-1bp). Tsys lagging the rally in core European bonds. Long term UK gilt yields 5bps lower ahead of BOE’s purchase operation in 15yr gilts this aft. German bunds higher led by longs amid lower crude oil, weak Factory Orders.   GOCs higher, in line with tsys, focus is on BOC tomorrow and employment Friday. We do not expect any change in rates from the BOC – growth is expected to rebound in the second half of the year (exports surged in July, non energy exports rose 4.1% m/m), more fiscal stimulus is on the way (the BOC’s $15bln in GOC issuance last month was the heaviest in seven yrs). Provis opening unch, QC update – deficit for Q1 fell to $529mln from $675mln yr ago, balanced budget for this FY still on target.

News headlines                                                                                                    

  • Emerging market bulls push stocks higher (Reuters) World shares closed in on one-year highs on Tuesday as the prospect of prolonged cheap borrowing costs and a recent rise in oil prices set off a new emerging market bull run. Asian stocks reached one-year highs overnight and MSCI’s 46-country ‘All World’ index .MIWD00000PUS was close as most of Europe’s markets climbed 0.1 to 0.3 percent higher.
  • Oil slips toward $47 as hopes for producer action wane (Reuters) Oil slipped toward $47 a barrel on Tuesday, falling further from the previous session’s one-week high on receding hopes for imminent action to tackle a supply glut. Saudi Arabia and Russia agreed on Monday to cooperate in world oil markets, prompting Brent to jump almost 5 percent only to pare gains after Saudi Energy Minister Khalid al-Falih said there was no need to freeze output for now.
  • Enbridge Inc to buy Spectra Energy in stock deal worth $37 billion (Financial Post) Enbridge Inc, Canada’s largest pipeline company, said today it would buy Spectra Energy Corp in an all-stock deal valued at about $37 billion (US$28 billion) to create the largest North American energy infrastructure company.
  • G20 a success for China, but hard issues kicked down the road (Reuters) China is lauding its successful hosting of the G20 summit in scenic Hangzhou, with open confrontation largely avoided and broad consensus reached over the fragile state of the global economy and the need for a wide range of policies to fix it.
  • China’s Productivity Growth is the Worst Since the Asia Crisis (Bloomberg) Government employees playing badminton in a Tianjin office lobby in the middle of the  afternoon. Hundreds of miles away in the northern city of Tieling, workers manually cut rubber truck parts in a tiny family workshop that makes about $600 a month.
  • China Is About to Get Serious With Bad Debt (Bloomberg) China’s banks, which dialed down fundraising efforts this year even as bad debts swelled, are making up for lost time. Both lenders and the companies set up to acquire their delinquent assets are bolstering their finances. China Citic Bank Corp. last month announced plans to raise as much as 40 billion yuan ($6 billion), while Agricultural Bank of China Ltd., Industrial Bank Co. and China Zheshang Bank Co. are also boosting capital. China Cinda Asset Management Co. and China Huarong Asset Management Co. are poised to tap investors.
  • Bayer Sweetens Takeover Bid Again as Monsanto Mulls Options (Bloomberg) Bayer AG sweetened its takeover bid for Monsanto Co. to $56 billion, raising its offer for a second time in its pursuit to become the world’s largest producer of seeds and pesticides. Monsanto responded to say that it’s evaluating the Bayer offer as well as proposals from other parties and strategic alternatives.

Overnight markets

  • Overview: US 10yr note futures are up 0.0119% at 130-31, S&P 500 futures are up 0.25% at 2172.75, Crude oil futures are up 1.25% at $43.7, Gold futures are up 1.01% at $1330.4, DXY is down -0.3% at 95.362.

US Economic Data

  • 10:00 AM: Labor Market Conditions Index, August, (prior 1.0)
  • ISM Non-Manufacturing Composite, August, est. 55.0 (prior 55.5)
  • IBD/TIPP Economic Optimism Index, September, est. 48.1 (prior 48.4)

Canadian Economic Data

  • 10:00 AM:  Bloomberg Nanos Confidence Index, September 2nd, (prior 59.3)

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