cti2015header-morning comments web

Market Update

  • Tsys getting crushed for a second day, yields 2-6bps higher & the curve steeper with the US 10Y firmly above 1.60%, now 1.65 (+5bps). German govt bonds lower, yield curve steeper in follow thru to yest ECB decision. JGB curve ~8bps steeper – Reuters story on BOJ studying options to steepen yield curve as curve flattening has hurt bank profits. European stocks lower, financials bucking the trend – Deutsche Bank up 4% on reports the bank is near a settlement with the US on its sale of RMBS leading up the financial crisis. GOCs lower, curve steeper led by 10s with the 10Y at 1.13% the highest since June 30th. Cda Employment rose 26.2k in August vs 14k exp led by 52.2k full time jobs. Alberta long deal at 17 over Ontarios well received, now 16.8 bid on screens. Three corp deals yesterday all did well in secondary (Suncor & CWB breaking 10bps tighter), with more supply expected (reits & utilities, banks, Couche Tard).

 News headlines                                                                                                         

  • Bond, Stock Slide Deepens as Stimulus Outlook Wanes; Oil Falls (Bloomberg) Selloffs in bonds and stocks around the world deepened on signs central banks are starting to question the benefits of further monetary easing. Oil pared a weekly gain, leading commodities lower.
  • German exports plummet in July, hit trade surplus (Market Watch)  Germany’s trade surplus in July came in lower than expected as exports plummeted, the latest in a string of weak economic data from Europe’s industrial powerhouse at the start of the third quarter. Germany’s trade surplus, adjusted for seasonal swings and calendar effects, fell to 19.4 billion euros ($21.9 billion) from a revised EUR21.4 billion in June, the Federal Statistical Office, Destatis, said Friday. Economists polled by The Wall Street Journal had forecast a surplus of EUR22.7 billion.
  • China’s Aug inflation trends point to stabilizing economy (Reuters) China’s consumer price inflation slowed to its weakest pace in almost a year in August, pulled down by abating food costs, although an encouraging moderation in producer price deflation added to growing evidence of a steadying economy. Indeed, the broader inflation trends shown in Friday’s data confirm recent signs of a more sure-footed recovery in the world’s second-biggest economy, allowing authorities to resist any fresh monetary easing as they move to curb an unsustainable build up of credit in the financial system.
  • Wells Fargo will pay $190 million to settle customer fraud case (Reuters) Wells Fargo has long been the envy of the banking industry for its ability to sell multiple products to the same customer, but regulators on Thursday said those practices went too far in some instances.
  • Canada’s economy could take 15 years to ‘reinvent’ itself, warns head of Royal Bank of Canada (Financial Post) Canada’s economy could take 15 years to reinvent itself after manufacturing and service industries began to shrink in the wake of the financial crisis, Royal Bank of Canada CEO David McKay said.
  • Canada’s new housing prices rise more than expected on Toronto strength (Financial Post) Canadian new housing prices rose more than expected in July, climbing 0.4 per cent from June on continued strength in the hot market of Toronto, Statistics Canada data indicated on Thursday. The monthly increase, the 16th in a row, was greater than the 0.2 per cent advance forecast by analysts in a Reuters poll.

Overnight markets

  • Overview: US 10yr note futures are down -0.2391% at 130-13, S&P 500 futures are down -0.56% at 2158.75, Crude oil futures are down -2.35% at $46.5, Gold futures are down -0.07% at $1340.6, DXY is up 0.17% at 95.186.

US Economic Data

  • 10:00 AM: Wholesale Inventories, m/m, July F, est. 0.1% (prior 0.0%)
    Wholesale Trade Sales, m/m, July, est. 0.2% (prior 1.9%)

Canadian Economic Data

  • 8:30 AM: Unemployment Rate, August, 7.0%, est. 7.0% (prior 6.9% )
    Net Change in Employment, August, 26.2k, est. 14.0k (prior -31.2k)

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