Market Update Tsys trading lower, 10Y 2.855 (+2bps) , paring gains with UK hilts after BOE. European equities lower, S&P futures +5, crude extending Wednesday’s losses down 0.53 @ 61.25. Tsys pressured by gilts after BOE MPC decision to leave rates unch thou the BOE members believed policy would have to be tightened earlier and to a greater degree than what was projected in Nov – 5Y gilt taking the brunt of the selling ~7bps higher @ 1.07%, thou the 10Y @ 1.60% at a new high since Feb 2016. GOCs lower outperforming the pullback in tsys by ~1bp out to 10s, with the curve unch .
News headlines
Stocks’ Bumpy Ride Resumes as Bond Jitters Linger: Markets Wrap (Bloomberg) U.S. stocks remained on unsteady footing as the bout of volatility that’s gripped global financial markets persisted amid signs that the rise in Treasury yields has yet to run its course. Pressure Wednesday came from a weak 10-year note auction, sending the rate toward the four-year high that days ago sparked the biggest equity selloff in seven years. Stocks swung between gains and losses throughout the session before ending lower after heavy selling in the final 15 minutes of trading. Volume on U.S. exchanges topped 9 billion shares for a fourth straight day after surpassing that total just once in the past seven months.
Senate Deal Would Avoid Shutdown as Funding Fight Turns to House (Bloomberg) Senate leaders announced a bipartisan two-year budget agreement Wednesday that would provide nearly $300 billion in additional funding, a crucial step toward averting a Friday government shutdown and ending a months-long impasse on spending priorities. The plan would suspend the federal debt ceiling until March 1, 2019, and would provide almost $90 billion in hurricane and wildfire disaster aid. A Senate vote is expected Thursday, followed by the House.
The Bank of England’s Forecast Horizon Is Increasingly Clouded (Bloomberg) The Bank of England’s job of predicting the future is getting more and more difficult as Brexit increasingly dims its vision. The U.K. central bank will lay out how it expects the economy to perform over the next three years at noon on Thursday in London, and Governor Mark Carney will face questions on the topic from journalists. Yet two-thirds of its forecast period comes after the nation’s exit date from the European Union, and there is little clear indication yet as to what any alternate trading relationship might look like.
China’s Yuan Toppled From Two-Year High as Trade Data Surprises (Bloomberg) China’s yuan sank the most since the aftermath of its shock 2015 devaluation, after data showed the country’s trade surplus more than halved last month, and investors speculated controls on outward cash flows will be eased. The yuan weakened as much as 1.2 percent in Shanghai, touching as low as 6.3550 per dollar on Thursday. The slump marks a reversal for the managed currency, which acts as an anchor for the wider Asian region and has been rallying amid the dollar’s retreat.
Canada’s Telus reports higher fourth-quarter profit (Reuters) Telus Corp, one of Canada’s three big telecom providers, reported higher fourth-quarter earnings compared with a year earlier, helped by lower spending. Telus said on Thursday its net income rose to C$282 million ($224 million) or 47 Canadian cents per share in the quarter ended Dec. 31, from C$87 million or 14 Canadian cents per share, a year earlier. Operating revenue rose to C$3.48 billion from C$3.31 billion, the Vancouver-based company said.
Stock futures little changed, with earnings in focus (Reuters) March futures on the S&P TSX index SXFc1 were up 0.11 percent at 7:15 a.m. ET. New housing price index data is due at 8:30 a.m. ET ECONCA Canada’s main stock index closed lower on Wednesday, dragged down by energy companies and miners as oil and metal prices dropped. Dow Jones Industrial Average e-mini futures 1YMc1 were down 0.073 percent at 7:15 a.m. ET, while S&P 500 e-mini futures ESc1 were down 0.09 percent and Nasdaq 100 e-mini futures NQc1 were up 0.12 percent.
Canadian blockchain ETF launches, shrugging off bitcoin volatility (BNN) Canada’s first blockchain exchange-traded fund is shrugging off bitcoin’s bust and will launch Wednesday as planned. Harvest Portfolios Group Inc.’s Blockchain Technologies ETF began trading on the Toronto Stock Exchange under the symbol HBLK, amid extreme market volatility that saw the Dow swing more than 900 points in 25 minutes Tuesday after plummeting the most ever Monday.
Overnight markets
Overview: US 10yr note futures are down -0.103% at 120-28, S&P 500 futures are up 0.49% at 2681.25, Crude oil futures are down -1.08% at $61.12, Gold futures are up 0.12% at $1316.2, DXY is up 0.04% at 90.29, CAD/USD is down -0.05% at 0.7961.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.853% | 2 Year | 2.122% |
| 5 Year | 2.138% | 5 Year | 2.568% |
| 10 Year | 2.387% | 10 Year | 2.849% |
| 30 Year | 2.495% | 30 Year | 3.141% |
US Economic Data
| 8:30 AM | Initial Jobless Claims, Jan 27th 221k est 232k (230k prior) |
| Continuing Claims, Jan 27th 1923k est 1940k (1953k prior) | |
| 8:45 AM | Bloomberg Feb. Economic Survey |
| 9:45 AM | Bloomberg Consumer Comfort, Feb 4th (54.6 prior) |
| 02/08 | Mortgage Delinquencies, 4Q (4.88% prior) |
| MBA Mortgage Foreclosures, 4Q (1.23% prior) |
Canadian Economic Data
| 8:15 AM | Housing Starts, Jan 216.2k est 210.0k (217.0k prior) |
| 8:30 AM | New Housing Price Index MoM, Dec 0.0% est 0.1% (0.1% prior) |
| New Housing Price Index YoY, Dec 3.3% (3.4% prior) |
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, Hugues Savard
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230