Market update
Treasuries open NY weaker, 10-year note 1.907%, 2-year 0.894%. In Asian session, China foreign exchange reserves declined but at smaller pace than previous months; China Communist Party sets goal of 6.5 to 7 percent yearly growth. Asian commercial banks bought two year Tsys, while other buying occurred in ten year notes. Asian and Japanese real money bought 3-year notes. Asian bank trading accounts do one year receiving in US swaps. Iron ore price jumped 19% in one day, in what Credit Agricole’s David Keeble caps the largest one day jump ever, on hopes of stronger China economic growth. In LONDON, Treasuries receded lower anew. European stocks moved lower led by banks and miners, with ED&F stock esp. lower. Crude oil moved higher. CRT said cash US ten year notes are most active at 32%. Bunds rose, especially intermediates amid weak German manufacturing orders and weak European Sentix investor sentiment.
News headlines
- Stocks Fall With Copper, Euro as Investors Weigh Stimulus Plans (Bloomberg) European shares fell with copper and zinc, while the dollar and German bonds climbed, as investors assessed the impact of China’s growth plans and the potential for European Central Bank stimulus measures this week. Miners, banks and telecoms firms led declines in the Stoxx Europe 600 Index, and U.S. equity-index futures were also lower. Copper fell from a four-month high, while investors continued adding to gold holdings and iron-ore prices surged. French bonds led gains in euro-area government securities, while the shared currency sank on speculation the ECB will lower the deposit rate and boost bond purchases. Crude extended last week’s gains and Treasuries fell.
- China Plans Income-Tax Overhaul to Bolster Consumption (Bloomberg) China plans to revamp its income-tax system to include deductions such as mortgage interest, education expenses and the cost of raising children, said Finance Minister Lou Jiwei, as the nation seeks to maintain consumption as a major growth driver. The ministry submitted a draft plan to overhaul the personal income tax system for the nation’s State Council to review and will submit a draft law to the National People’s Congress this year, Lou said Monday at a briefing in Beijing.
- China’s Foreign Reserves Slow Decline as Currency Stabilizes (Bloomberg) China’s foreign-exchange reserves fell at a slower pace last month as the nation’s financial markets stabilized and policy makers took more steps toward shoring up growth. The world’s largest currency hoard dropped by $28.6 billion to $3.2 trillion in February, the People’s Bank of China said in a statement Monday. That was the smallest decline since June and less than the $40.9 billion decrease expected by economists surveyed by Bloomberg, who had a median projection that reserves would fall to $3.19 trillion.
- CMHC revs up hunt for foreign flows into torrid housing market (TheGlobeandMail) Canada’s housing agency, looking for new methods to track foreign ownership in the country’s soaring real estate markets, may tap money laundering police and classify international university students as foreign buyers, according to internal documents. Canada Mortgage & Housing Corp., the crown corporation that backstops mortgages and tracks new housing data, has been in contact with at least eight government agencies to find data on offshore buyers in Vancouver, Toronto and Montreal as prices continue to soar, according to 486 pages of e-mails, briefing notes, and other documents Bloomberg News obtained through a freedom of information request.
- Iron Ore Jumps Most on Record as Market Goes ‘Berserk’ (Bloomberg) Iron ore soared the most ever after Chinese policy makers signaled their willingness to buttress economic growth, boosting the outlook for steel consumption in the top user and igniting speculation that some investors who’d bet against the market had been caught out. Ore with 62 percent content delivered to Qingdao jumped 19 percent to $63.74 a dry metric ton, Metal Bulletin Ltd. data show. That’s the biggest gain in daily data going back to 2009 and the highest price since June. The surge was preceded in Asia by a rally in futures, with the most-active contract on Singapore Exchange Ltd. climbing 21 percent to $60 and prices on the Dalian Commodity Exchange rising by the daily limit.
- Insight: Wall Street vets battle BP in fallout over Canada refinery (Reuters) A legal battle between a team of former Wall Street oil traders and behemoth producer BP plc (BP.L) over a remote Canadian refinery sheds rare light on the murky world of crude trading. The first salvo in the previously unreported dispute was fired by BP in December. The oil company demanded, through arbitration, $110 million from the private equity-backed NARL Refining for its alleged failure to properly manage and maximize profits from the Come-by-Chance plant in Newfoundland.
- Hong Kong Home Sales Tumble 70% as Slowdown Intensifies (Bloomberg) Hong Kong residential home sales plunged 70 percent in February from a year earlier to a 25-year low, as falling prices and economic uncertainty deterred buyers. Last month, 1,807 homes were sold in Hong Kong, compared with 6,027 a year earlier, according to government statistics. Home sales fell from 2,045 in January, the data show.
- China’s Foreign Reserves Slow Decline as Currency Stabilizes (Bloomberg) China’s foreign-exchange reserves fell at a slower pace last month as the nation’s financial markets stabilized and policy makers took more steps toward shoring up growth. The world’s largest currency hoard dropped by $28.6 billion to $3.2 trillion in February, the People’s Bank of China said in a statement Monday. That was the smallest decline since June and less than the $40.9 billion decrease expected by economists surveyed by Bloomberg, who had a median projection that reserves would fall to $3.19 trillion.
Overnight markets
- Overview: US 10yr note futures are down -0.0847% at 128-32, S&P 500 futures are down -0.38% at 1987.5, Crude oil futures are up 1.25% at $36.37, Gold futures are up 0.1% at $1272, DXY is up 0.22% at 97.559.
US Economic Data
- Labor Market Conditions Index Change will be released at 10:00 AM
- Consumer Credit number will be released at 15:00 AM
Canadian Economic Data
- There is no major economic data for today
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