Market Update
US tsy yields 1-3 bps lower, curve flatter , 10Y 2.388 (-3.1bps). S&P futures lower and crude off 2.0%. Tsys higher since early European trading as oil slid while UK gilts rally(10Y 1.325 -5.3bps) on Brexit concerns following comments from PM May, also USD softer vs Yen. ECB buying of peripherals rumoured according to MNI, explains strong tightening in Italy, Spain vs bunds. GOCs higher , outperforming tsys by ~1bp in 10s, block trade in CGBs (1800 ct at 7:51). The US is scheduled to 3/10/30Y bonds starting Tuesday for $56bln, while the BOC auctions $3.9bln in reopened Feb 19s (2Y) notes on Wednesday which will become benchmark.
News headlines
U.S. stock futures dip with oil prices; all eyes on Dow 20,000 (Reuters) U.S. stock index futures were slightly lower as oil prices dipped on Monday, after the Dow Jones Industrial Average came tantalizingly close to 20,000 on Friday. The Dow hit 19,999.63 points on Friday after a late pop in Apple (AAPL.O) and other technology stocks. Wall Street has rallied since Donald Trump won the U.S. election in November as investors bet he will stimulate the economy with lower taxes and infrastructure spending.
Oil down on concerns rising U.S. production could dampen output cut deal (Reuters) Oil fell 2 percent on Monday as signs of growing U.S. production outweighed optimism that many other producers, including Russia, were sticking to a deal to cut supplies in a bid to bolster the market. Brent crude futures LCOc1 were down $1.08, or 1.9 percent, at $56.02 a barrel at 1227 GMT (7:27 a.m. ET), after touching a intra-day low of $55.85. U.S. crude futures CLc1 were trading at $52.99 per barrel, down $1, or 1.9 percent, compared with a session low of $52.85.
Russia cuts oil output by 100,000 bpd in early January: industry sources (Reuters) Russia cut its oil production in early January by around 100,000 barrels per day (bpd) from the previous month after an agreement with OPEC to cap global crude output, two sources from the energy sector told Reuters on Monday. Russia’s oil and gas condensate output averaged 11.1 million barrels per day (bpd) in the period from Jan. 1 to Jan. 8, according to the two sources. This was down from 11.21 million bpd in December and October’s level of 11.247 million bpd, a starting point for output reduction agreed with the Organization of the Petroleum Exporting Countries.
May Signals U.K. to Quit Single Market to Curb Immigration (Bloomberg) U.K. Prime Minister Theresa May signaled regaining control of immigration and lawmaking are her Brexit priorities even if that means quitting Europe’s single market. The pound fell to a 10-week low. In her first televised interview of the new year, May told Sky News on Sunday that leaving the European Union will be about “getting the right relationship, not about keeping bits of membership.”
Offshore Yuan Falls for Second Day as Bears Reload After Squeeze (Bloomberg) The yuan’s volatile start to 2017 showed no signs of abating, with the offshore currency tumbling for a second day as China’s central bank weakened its fixing by the most since June. The exchange rate fell 0.5 percent to 6.8844 per dollar as of 5:24 p.m. in Hong Kong, extending a 0.9 percent drop on Friday that was the biggest in a year. The offshore yuan is set to post the biggest two-day slump since June today, after moving 0.5 percent or more in four of the six trading sessions so far this year, a magnitude it only surpassed 11 times in all of 2016.
Magna International Inc gears up for 42% revenue boom over the next decade as cars get more complicated (Financial Post) Cars have never been more complex, and with that complexity comes an opportunity for parts suppliers to significantly increase their content per vehicle, according to the chief technology officer of Magna International Inc. Cars have never been more complex, and with that complexity comes an opportunity for parts suppliers to significantly increase their content per vehicle, according to the chief technology officer of Magna International Inc.
PMO held talks with Trump team to avert trade war (TheGlobeAndMail) Prime Minister Justin Trudeau’s most trusted lieutenants have held talks with top advisers to U.S. president-elect Donald Trump in an attempt to avert a costly trade war between the neighbouring nations. Mr. Trudeau’s principal secretary Gerald Butts, chief of staff Katie Telford and Canada’s ambassador to the United States, David MacNaughton, have met several times in Washington, in what have been described as bridge-building talks with Jared Kushner, Mr. Trump’s son-in-law, and Stephen Bannon, chief strategist and senior counsellor to the incoming Republican president.
Overnight markets
Overview: US 10yr note futures are up 0.3014% at 124-25, S&P 500 futures are down -0.15% at 2268, Crude oil futures are down -1.98% at $52.92, Gold futures are up 0.64% at $1180.9, DXY is up 0.04% at 102.26, CAD/USD is up 0.07% at 0.755.
US Economic Data
| 3:00 PM | Consumer Credit, Nov, est. 18.400b$ (prior 16.018b$) |
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence Index, Jan 6, (prior 56.8) |
| 10:30 AM | Business Outlook Future Sales, 4Q, (prior 12.00) |
| BoC Senior Loan Officer Survey ,4Q, (prior 3.3) |
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