cti2015header-morning comments web

Market Update

Us tsys higher, yields 2-3bps lower led by the 7Y , picking up on strength in EGBs. Core Europeanbonds aharply higher, flatter , German 10Y 0.30% at one month low. Stop loss buying in binds, dovish comments from ECB Weidmann who said ECB was in no rush to end its accomodative policy.. Demand for shorter term bunds driven by FTQ bid all week ahead of French election, Greece . France/German 10Y spread continues to widen on uncertainy, with supply also weighing as Finland expected to launch 5 & 30Y dual tranche issue.  GOCs higher in line with tsys led by 10Y below 1.65%, 2s10s 3bps flatter. Provis well bid despite lower all in yields , Quebec, MP rumoured as potential issuers after Ontario 10Y on Monday @ 68.5 (69/68). BOC auctions $400mln in RRB 1.25 Dec 47s at noon. Long term breakevens have rallied since the US election ~30bos yet are 10bps off the highs of early Jan. Carry is negaive due to weak Dec CPI yet should improve markedly next month.

News headlines 

Earnings Buoy Stocks as Peripheral Bonds Recover: Markets Wrap (Bloomberg) European stocks got a boost from earnings pointing to improving corporate and economic health, while bonds from Italy to France recovered as attention was diverted away from political risk.

Oil prices fall on bloated U.S. fuel inventories, stalling China demand (Reuters) Oil prices slid on Wednesday to extend falls from the previous session, as a big increase in U.S. crude inventories and a slump in Chinese demand implied that global oil markets remain oversupplied despite OPEC-led efforts to cut output.

OECD flags growth pick-up in U.S., Japan, Germany, France (Reuters) Economic growth appears to be picking up in the United States, Japan, Germany and France, the Organisation for Economic Co-operation and Development (OECD) said on Wednesday.

Greece Hits Back Against IMF as Bond Market Remains Spooked (Bloomberg) Greece pushed back against the International Monetary Fund’s view that the government’s economic reforms are heading off track. In official responses, published with an IMF report on Greece late Tuesday, Finance Minister Euclid Tsakalotos said the fund’s assessment was not based on recent evidence, while Bank of Greece governor Yannis Stournaras said it downplayed progress on the financial sector and was unduly pessimistic.

Political risks weigh on euro, yen gains (Reuters) The euro fell another third of a percent against the dollar on Wednesday, as concerns around a resurgence in political risk to the single currency project drove its worst run of daily losses in almost two months.

Canada Pledges $282 Million in Aid for Bombardier’s Marquee Jets (Bloomberg) Canada’s government will provide C$372.5 million ($282 million) in support for Bombardier Inc. to help fund two jet programs including the C Series, the single-aisle plane that competes with Boeing Co. and Airbus Group SE products.

Japan’s Abe hopes promises on jobs, defense will temper Trump’s tone on trade (Reuters) Prime Minister Shinzo Abe heads to Washington on Thursday hoping promises to help create U.S. jobs and bolster Japan’s military will persuade U.S. President Donald Trump to turn down the heat on trade and currency and stand by the decades-old alliance.

Overnight markets 

Overview: US 10yr note futures are up 0.1249% at 125-9, S&P 500 futures are down -0.12% at 2285.75, Crude oil futures are down -0.88% at $51.71, Gold futures are up 0.36% at $1240.5, DXY is up 0.11% at 100.37, CAD/USD is down -0.28% at 0.7605.

US Economic Data

7:00 AM MBA Mortgage Applications, Feb 3rd, 2.3% (prior -3.2%)

Canadian Economic Data

8:15 AM Housing Starts, Jan, 207.4k, est. 197.3k (prior 207k, revised 206.3k)

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