Market Update

Tsys trading mildly higher, 10Y 2.035% after falling below 2.02% in Asia on safe haven bid as Hurricane Irma approaches Florida, heavy volume in TY futures (515k). EGBs lower, sovereign spreads wider following comments from ECB member Likanen on possibility of QE taper in Dec. European equities slightly lower, S&P futs -6.5pts, crude moving higher above $49.00. GOCs lower, spds ~2bps wider vs tsys with little reaction to stronger Cdn employment data 22k vs 15k exp in July, yet the mix  less favorable with part time +110k , full-time -88k.

News headlines 

Dollar Tumbles as Yen, Euro Rally on Irma, ECB: Markets Wrap (Bloomberg) The dollar tumbled to its weakest level since the start of 2015 amid fading expectations of another U.S. rate increase this year. Havens including gold and the yen rallied as North Korea tensions and natural disasters unsettled investors.

Oil steady as Irma heads for Florida, Saudi Arabia cuts supply (Reuters) Oil prices steadied on Friday after almost a week of sharp rises as Hurricane Irma, one of the most powerful storms in a century, drove towards Florida after tearing through the Caribbean.

After rate hike, Canadian housing braces for ‘biggest rule change of all time’ (Financial Post) It didn’t take long for the impact of rising rates to hit the market. People rushed to lenders Thursday to lock in contracts and get pre-approved mortgages after the Bank of Canada raised its overnight lending rate the day before.

Irma Batters Reinsurance Mutual Fund as Hurricane Nears Florida (Bloomberg) Stephen Barnes suffered damage from Hurricane Irma even before it hits Florida. He owns Stone Ridge Reinsurance Risk Premium Interval Fund, a mutual fund that dropped more than 8 percent on Tuesday and slid further this week as the hurricane wreaked havoc in the Caribbean. In calmer times, Barnes has enjoyed solid returns uncorrelated with stocks and bonds while accepting risks that the fund that may be on the hook when disaster strikes.

UK manufacturers enjoy strongest growth this year but trade weak (Reuters) Britain’s manufacturing output expanded at the strongest pace this year in July, but there was little sign of improvement in the trade deficit despite sterling’s sharp fall since last year’s Brexit vote.

China stock exchanges to tighten rules on financing using stock as collateral (Reuters) China’s securities regulator on Friday published draft rules that would restrict borrowing using stocks as collateral, part of efforts to reduce leverage in the financial system and ward off systemic risks.

Overnight markets 

Overview: US 10yr note futures are up 0.025% at 127-18, S&P 500 futures are down -0.21% at 2459.5, Crude oil futures are down -0.14% at $49.02, Gold futures are up 0.33% at $1354.8, DXY is down -0.52% at 91.189, CAD/USD is up 0.04% at 0.825.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.506% 2 Year 1.27%
5 Year 1.707% 5 Year 1.637%
10 Year 1.968% 10 Year 2.054%
30 Year 2.342% 30 Year 2.676%

US Economic Data 

10:00 AM Wholesale Inventories, m/m, Jul F, est. 0.4% (prior 0.4%)
Wholesale Trade Sales, m/m, Jul, est. 0.5% (prior 0.7%)
3:00 PM Consumer Credit, Jul, est. $15.000b, (prior $12.397b)

Canadian Economic Data 

8:30 AM Capacity Utilization Rate, 2Q, 85.0%,est. 85.0% (prior 83.3%, revised 83.2%)
Net Change in Employment, Aug, 22.2k,  est. 15.0k (prior 10.9k)
Unemployment Rate, Aug, 6.2%, est. 6.3% (prior 6.3%)
Full Time Employment Change, Aug, -88.1, (prior 35.1)
Part Time Employment Change, Aug, 110.4,  (prior -24.3)
Participation Rate, Aug, 65.7, (prior 65.7)


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