Market Update

US tsys slightly lower in a 2-tick range o/n, extremely light volume in TY1 (123k) so far, 10Y 2.26% (+0.7%).  Core EGB yields ~1bp higher after yesterday’s ~3bp rally yesterday brought 10Y gilt yield close to one-month lows @ 1.15%, rate hike expectations have been pushed out further to 2019 in the wake of last week’s BOE forecasts for growth & inflation.  US Data calendar relatively thin until Thur PPI. US Tsy will auction $24 in 3Y notes at 1:00PM. No Fed speakers today – Bullard & Kashkari both sounded dovish yest.  GOCs higher in catch-up mode to yest tsy rally , Can/US 1bp tighter, extending recent outperformance . Canada employment was strong but mkt more focused on weak trade numbers.

News headlines 

Euro Extends Gain as Stocks Struggle; Gold Climbs: Markets Wrap (Bloomberg) Europe’s common currency strengthened and the dollar fell back in a lackluster trading session on Tuesday. European stocks erased a drop to trade sideways, while gold climbed with oil and bonds were mixed.

Oil prices steady as Saudi cuts September supplies (Reuters) Oil prices steadied on Tuesday after news of lower crude supplies from Saudi Arabia offset higher output from other large producers including the United States. Saudi state oil company Aramco will cut allocations to its customers worldwide in September by at least 520,000 barrels per day (bpd), sources familiar with the matter told Reuters on Tuesday.

OPEC holds second day of compliance talks, to issue statement: sources (Reuters) OPEC and non-OPEC officials were holding a second day of meetings in Abu Dhabi to discuss ways to boost compliance with their oil output-cutting pact, sources familiar with the talks said.

Dollar slips back toward lows on Fed rate hike doubts (Reuters) The dollar weakened again on Tuesday, but clung on to most of its gains from last week’s strong U.S. jobs data despite doubts that the Federal Reserve will hike rates again in 2017.

China’s Debt Crackdown Gets a Big Shrug From Global Investors (Bloomberg) The Chinese leadership has this year made its strongest commitment yet to curb financial risks and rein in spendthrift local officials, yet the campaign has spurred barely a ripple of concern among global investors.

SNC Targets Canadian Projects as Trudeau’s Plan Gets Jump on Trump’s (Bloomberg) Canada’s biggest builder is keeping its focus at home even as U.S. President Donald Trump pledges to ramp up infrastructure spending next door. SNC-Lavalin Group Inc. is bidding on projects such as light-rail lines in Ottawa and Toronto and a C$6 billion ($4.7 billion) rapid-transit system for Montreal, as Prime Minister Justin Trudeau follows through on a pledge to invest C$120 billion on infrastructure over 12 years. Trump’s plan is “still to be confirmed,” said SNC Chief Executive Officer Neil Bruce.

Overnight markets 

Overview: US 10yr note futures are up 0.025% at 126-07, S&P 500 futures are down -0.14% at 2474, Crude oil futures are up 0.18% at $49.48, Gold futures are up 0.37% at $1269.4, DXY is down -0.17% at 93.271, CAD/USD is down 0% at 0.7887.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.232% 2 Year 1.351%
5 Year 1.521% 5 Year 1.809%
10 Year 1.898% 10 Year 2.253%
30 Year 2.337% 30 Year 2.831%

US Economic Data 

6:00 AM NFIB Small Business Optimism, Jul, 105.2, est. 103.5 (prior 103.6)
 10:00 AM JOLT Job Openings, Jun, est. 5700 (prior 5666)

Canadian Economic Data

10:00 AM Bloomberg Nanos Confidence, Aug 4th,  (prior 59.5)


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