Market update
US tsys lower after June non farm payrolls surged 287K vs 180K exp with the 3mo avg 147K, with the unemployment rate up 0.2% at 4.9% – Us 10Y 1.415 (+2.9bps). S&P minis higher after strong figures, Euro Stoxx +2.0%. Canadian empl fell 0.7k last month from 13.8K in May thou full time rose 39.4k showing some strength in the mix. CAD lower , USD index higher after data, crude slightly higher after massive 5% selloff yest on EIA inventory data. Provi spds wider this morn 1-1.5bps after ending 1bp wider yest . Ont 48 102/101 from 100 at issue yest.
News headlines
- European Stocks Rise as Dollar Slips Before Jobs Data; Oil Gains (Bloomberg) European stocks rose for a second day while the dollar weakened against most of its major peers before a U.S. jobs report that may set the tone for Federal Reserve monetary policy. The Stoxx Europe 600 Index pared losses in the biggest weekly decline in two months. New Zealand’s currency and Britain’s pound, the world’s worst performing major currency this year, led gains against the dollar on Friday. Crude clawed back some of the last session’s 4.8 percent plunge, which was triggered by data showing a smaller-than-expected decrease in U.S. supplies.
- Oil bounces off two-month lows but faces sharp weekly loss (Reuters) Crude prices bounced back on Friday from two-month lows hit in the previous session, but benchmark Brent was in line for its largest weekly decline since January as bearish economic indicators weighed on oil. Prices have gyrated as a glut of refined products and slowing economic growth contrasted with the risk of supply disruptions and expectations that the world’s overhang of crude would soon begin to recede.
- Pound Overtakes Argentine Peso to Become 2016’s Worst Performer (Bloomberg) The pound headed for a third week of declines spurred by the Brexit vote, winning itself the title of 2016’s worst performer among major currencies. Sterling’s rally Friday barely dented its 2.7 percent slide versus the dollar in the preceding four days. The U.K. currency this week overtook the Argentine peso as the biggest loser versus the dollar among 31 major peers in 2016 as investors continued to digest the fallout from the June 23 referendum decision to leave the European Union.
- Italy State Intervention on Banks May Be Needed, Visco Says (Bloomberg) State intervention to support Italian banks may be needed because of the risk that current difficulties could undermine trust in the nation’s financial industry, said Bank of Italy Governor Ignazio Visco. “Given the risk that, in a context of high uncertainty, limited problems could undermine the trust in the banking system, a public intervention cannot be excluded,” Visco said in a speech on Friday at the Italian Banking Association’s annual meeting in Rome.
- S. payrolls seen rebounding in June in boost to economy (Reuters) U.S. job growth likely rebounded in June as striking Verizon (VZ.N) employees returned to work and wages probably rose steadily, more evidence the economy has regained speed after a first-quarter lull. The U.S. Labor Department’s jobs tally due on Friday is likely to show nonfarm payrolls increased by 175,000 jobs last month after a meager 38,000 gain in May, according to a Reuters survey of economists. The unemployment rate is forecast rising to 4.8 percent from an 8-1/2-year low of 4.7 percent a month earlier as some job seekers returned to the labor market.
- Obama says confident Britain will have orderly Brexit transition: FT (Reuters) U.S. President Barack Obama said he was confident that Britain and the European Union would be able to agree an orderly transition to a new relationship after last month’s Brexit vote. “As difficult as it will be, I am confident that the UK and the EU will be able to agree on an orderly transition to a new relationship,” Obama said in an article for the Financial Times, calling upon NATO to stand united against global challenges.
- EU-U.S. commercial data transfer pact clears final hurdle (Reuters) A commercial data transfer pact provisionally agreed by the EU executive and the United States in February received the green light from EU governments on Friday, the European Commission said, paving the way for it to come into effect next week. Its introduction should end months of legal limbo for companies such as Google, Facebook and MasterCard after the EU’s top court struck down the previous data transfer framework, Safe Harbour, on concerns about intrusive U.S. surveillance.
Overnight markets
- Overview: US 10yr note futures are up 0.0117% at 133-23, S&P 500 futures are up 0.61% at 2104.75, Crude oil futures are up 1.51% at $45.82, Gold futures are down -0.67% at $1353, DXY is down -0.08% at 96.254.
US Economic Data
- 8:30 AM: Change in Nonfarm Payrolls, June, est. 180k (prior 38k)
- Change in Private Payrolls, June, est. 170k (prior 25k)
- Change in Manufacturing Payrolls, June, est. -3k (prior -10k)
- Unemployment Rate, June, est. 4.8% (prior 4.7%)
- Average Hourly Earnings, m/m, June, est. 0.2% (prior 0.2%)
- Average Hourly Earnings, y/y, June, est. 2.7% (prior 2.5%)
Canadian Economic Data
- 8:30 AM: Unemployment Rate, June, est. 7.0% (prior 6.9%)
- Net Change in Employment , June, est. 5.0k (prior 13.8k)
- Participation Rate, June, (prior 25k)
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