Market Update
Tsys mixed, slightly higher in the short end, 10s unch 2.56%, tsy futures in narrow 3 tick range overnite. German bund curve steeper bias after ECB left rates & QE unch. Tsys/bunds reacting to Draghi’s hawkish press conf – revision upwards in HICP inflation, GDP. Tsys also buoyed by continued weakness in crude , now off another 2.1% at 49.20 after yest 5.4% drop on crude inventory build. GOCs moving lower with tsys on Draghi, provis unch.
News headlines
Oil Extends Slump as Euro Gains Before ECB Meet: Markets Wrap (Bloomberg) Crude’s selloff deepened, with prices slumping a fourth day amid a broad commodities retreat that dragged down European stocks. Bonds moved higher, while the euro strengthened with the dollar as investors prepare for key central bank meetings. Oil couldn’t sustain an early bounce after data showing U.S. inventories at a record battered prices Wednesday. West Texas Intermediate dropped below $50 per barrel as metals also fell. Commodity producers dragged European stocks lower, while the euro rose before Thursday’s European Central Bank meeting, where no change in monetary policy is expected.
ECB Keeps Bond-Buying, Rates Unchanged Amid Inflation Flare-Up (Bloomberg) The European Central Bank kept its quantitative-easing program unchanged as policy makers gauge whether a recent jump in inflation will endure. The Governing Council reaffirmed its decision that monthly asset purchases will be reduced to 60 billion euros ($63 billion) from April, compared with 80 billion euros currently. Policy makers also left the main refinancing rate at zero and the deposit rate at minus 0.4 percent, as predicted by all economists in a Bloomberg survey.
China February producer inflation fastest in nearly nine years as commodities surge (Reuters) China’s producer price inflation accelerated to its fastest pace in nearly nine years in February and by more than expected as prices of steel and other raw materials extended a torrid rally, boosting profits for industrial companies worldwide. Consumer inflation, however, cooled more than expected to its mildest pace since January 2015 as food prices fell, remaining well below the government’s 3 percent target.
As Gold Stalls, Canada’s Top Equity Fund Manager Likes Oil, Zinc (Bloomberg) Chris Beer has made the RBC Global Precious Metals Fund the best-performing Canada-focused mutual fund by scooping up smaller, growth-oriented gold companies. He thinks energy and metals are now the better play.
Shell Cuts Debt With $7.25 Billion Sale of Canada Oil Sands (Bloomberg) Royal Dutch Shell Plc will sell almost all of its production assets in Canada’s oil sands in a $7.25 billion deal that cuts debt and reduces involvement in one of the most environmentally damaging forms of fossil-fuel extraction.
Overnight markets
Overview: US 10yr note futures are down -0.14% at 122-31, S&P 500 futures are down -0.02% at 2360.5, Crude oil futures are down -1.85% at $49.35, Gold futures are down -0.25% at $1206.4, DXY is up 0.04% at 102.11, CAD/USD is up 0.23% at 0.7395.
US Economic Data
| 8:30 AM | Capacity Utilization Rate, 4Q, 82.2%, est. 82.5% (prior 81.9%, revised 81.6%) |
| New Housing Price Index, m/m, Jan, 0.1%, est. 0.1% (prior 0.1%) | |
| New Housing Price Index, y/y, Jan, 3.1%, (prior 3.0%) |
Canadian Economic Data
| 7:30 AM | Challenger Job Cuts, y/y, Feb, -40.0%, (prior -38.8%) |
| 8:30 AM | Initial Jobless Claims, Mar 4, 243k, est. 238k (prior 223k) |
| Continuing Claims, Feb 25, 2058k, est. 2062k (prior 2066k, revised 2064k) | |
| Import Price Index, m/m, Feb, 0.2%, est. 0.1% (prior 0.4%, revised 0.6%) | |
| 9:45 AM | Bloomberg Consumer Comfort Index, Mar 5, (prior 49.8) |
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