cti2015header-morning comments web

Market update

Tsys sharply higher, curve ~3bps flatter with longs leading (2.643 -6.4bps) and the US 10Y 1.85 (-6bps).  European equities unch after being down 1.6% as euro bank stocks surged in just a few minutes ~7:00am. Gold & crude higher. Tsys bid right out the gate in Asia on weak China trade data and huge rally in thirty year JGBs – the largest one-day drop in yields since 2013 (22bps) after the MOF auctioned Y800bln in 30Y bonds with a coupon of 0.8% down from 1.4% on Feb 9th and a strong bid/cov of 4.21 (3.04). Latest JPM US Tsy Client Survey showed the most shorts since Feb 1st.  GOCs higher, curve ~4bps flatter with 10s ~4.5bps better on the curve, provis starting out bit wider as cda yields are ~6bps lower out the curve. Quebec officially in blackout with budget March 17th.

News headlines

  • China Reality Check Dashes Stocks Rally as Commodities Decline (Bloomberg) Global stocks dropped as a slump in Chinese exports dragged commodities prices lower and brought equities’ five-day winning streak to a halt. Japanese government bonds surged in a haven-asset rally that also lifted the yen, gold and Treasuries. The Stoxx Europe 600 Index extended its decline from a five-week high as investors sold equities that had led the recent rebound, while Brent crude slid after closing on Monday above $40 a barrel for the first time this year
  • Treasuries Rally as Japan Yields Extend Record Low on Safety Bid (Bloomberg) Treasuries gained with Japanese bonds, whose 10-year yields extended their push below zero, as stock-market declines drove demand for the relative safety of sovereign debt. The world’s two biggest bond markets advanced after official data showed Chinese exports tumbled and Japan’s economy contracted, sending stocks in the region lower.
  • German Industrial Production Surges by Most Since 2009 (Bloomberg) German industrial production jumped by the most in more than six years in January, in a sign that strong domestic demand may be helping to underpin output even as external trade cools. Production, adjusted for seasonal swings, climbed 3.3 percent from the prior month after retreating a revised 0.3 percent in December, data from the Economy Ministry in Berlin showed on Tuesday.
  • Carney’s `Brexit’ Stance Under Fire as BOE Accused of Bias (Bloomberg) Mark Carney was accused of jeopardizing the Bank of England’s credibility in the European Union debate as he faced a fiery line of questioning from U.K. legislators. While the BOE governor has spent months trying to avoid the political battle — a task lawmaker Andrew Tyrie compared to bomb disposal — some members of the Treasury Committee said BOE statements including an October report and a letter published Tuesday supported the government’s bid to keep Britain in the bloc. They questioned whether the central bank had overstated the positives.
  • Oil edges lower after Kuwait dents hopes for output freeze (Reuters) Oil prices edged lower on Tuesday after Kuwait said it would only agree to an output freeze if all major producers take part and Goldman Sachs analysts poured cold water over the prospects for a sustained rally.
  • Iron Ore’s Rally Stalls as Goldman to Citigroup Forecast Retreat (Bloomberg) Iron ore’s rally stalled on Tuesday after a record 19 percent advance a day earlier as banks from Goldman Sachs Group Inc. to Citigroup Inc. together with some of the largest miners said that the surge wasn’t likely to endure. Ore with 62 percent content delivered to Qingdao dropped 0.2 percent to $63.63 a dry metric ton, Metal Bulletin Ltd. data showed. The decline was preceded in Asia by a fall in bellwether futures in Singapore, which lost as much as 12 percent.

Overnight markets

  • Overview: US 10yr note futures are up 0.3636% at 129-13, S&P 500 futures are down -0.3% at 1993, Crude oil futures are up 0.55% at $38.11, Gold futures are up 0.73% at $1273.2, DXY is up 0.04% at 97.107.

US Economic Data 

  • NFIB Small Business Optimism came in at a level of 92.9, weaker than expected and down from prior month.

Canadian Economic Data 

  • Housing Starts number came in at a level of 212.6k, beating the estimate by 23K and up by 47.5k from prior month.
  • Building Permits MoM growth was -9.8%, weaker than expected and down from prior month.



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