Market Update
Tsys opening unch, curve slightly flatter, 2Y +0.5bps 1.29%, 10Y unch 2.382, light volume in TY futures. S&P futures up 0.1%,crude extending gains +1.2% @52.88 on Libyan oil field outage and Russia signalling an extension of OPEC production cuts. Euro near one month low, German bunds higher & steeper, 10Y 0.223%. Bund-OAT spd 3.6bps wider at 70bps. Weakness in France & periphery on polls showing rise of left wing candidate Melenchon. The US auctions $24bln in 3Y notes this aft followed by $20bln in 10Y notes tomorrow and $12bln 30Y bonds Wednesday as Thursday is half day before full day close Friday. In Canada, GOCs are unch. Friday saw GOCs lag the pullback in tsys as US 10s went from 2.27% pre non farms to 2.38% with GOCs actually narrowe in the short end despite strong Cdn employment. BOC decision & MPRthis Wednesday – Poloz likely to remain cautious and focus on ongoing risks including non energy exports, household debt.. Provis opening unch after finishing Friday 1-1.5bps tighter, long Ontario deal rumoured.
News headlines
Dollar Enjoys Support From Dudley Comments Before Yellen Q&A (Bloomberg) A post-U.S. payrolls rebound in the dollar and Treasury yields kept driving thin markets on Monday before a speech by Federal Reserve Chair Janet Yellen that follows hawkish comments from Fed Vice-Chairman William Dudley. Yellen will speak at the University of Michigan Ford School of Public Policy and will take questions from the audience and Twitter. Investors will look for further forward guidance after Dudley downplayed the length of any pause in short-term rate normalization after the Fed starts shrinking its balance sheet. The Bloomberg Dollar Spot Index rose a third day, up as much as 0.2 percent amid modest flows, according to foreign-exchange traders across Europe.
A Foreign Threat to U.S. Treasuries That Dwarfs Fed’s Debt Hoard (Bloomberg) These days, it seems like everyone in the bond market is obsessed over what will happen when the Federal Reserve starts whittling down its mammoth, crisis-era investments in U.S. government bonds. Yet lost in the hullabaloo is one little-noticed fact: there’s an even bigger debt pile that could draw buyers away from Treasuries at just the wrong time.
French Election Becomes a Four-Way Race as Melenchon Surges (Bloomberg) France’s presidential election is becoming a four-way contest as far-left candidate Jean-Luc Melenchon surges to catch Republican Francois Fillon, stoking uncertainty over the outcome less than two weeks before voting begins.
Bank of England Pressed Banks to Lower Libor Rates, BBC Says (Bloomberg) The Bank of England repeatedly pressured commercial banks to lower their settings for the benchmark London interbank offered rate during the 2008 financial crisis, according to the BBC. The report cited a secret recording in which a senior manager at a large U.K. bank instructed a Libor submitter to lower his rates.
Oil rises after U.S. missile strike in Syria, ends week 3 per cent up (TheGlobeandMail) Oil prices rose on Friday, trading near a one-month high and closing the week up 3 per cent after the United States fired missiles at a Syrian government air base, raising concern that the conflict could spread in the oil-rich region.
Barclays C.E.O. Investigated Over Treatment of Whistle-Blower (NYTimes) The British authorities are investigating Barclays and its chief executive, James E. Staley, after he admitted to trying to learn the identity of a whistle-blower last year, the bank said on Monday. The investigation adds to the public relations troubles of the bank, whose reputation has been hit hard in Britain in recent years by revelations of employee misconduct dating from the financial crisis and earlier.
Mondelez Lays Groundwork to Replace Its Chief Executive, Irene Rosenfeld (Fortune) Mondelez International is preparing to look for a successor to Chief Executive Officer Irene Rosenfeld as the snack maker faces shareholder pressure and a broad shift to healthier eating hab its , the Wall Street Journal reported, citing sources.
Taper Tranquility Not Tantrum Greets Fed Bond-Reduction Plan (Bloomberg) News about the U.S. central bank’s strategy to start reducing its bond holdings, which began taking shape over the past week, has actually led to easier financial conditions via lower interest rates. That contrasts with the surge in Treasury yields that occurred during the so-called “taper tantrum” of 2013, when then-Fed Chairman Ben Bernanke hinted the central bank would reduce its purchases of Treasuries and mortgage-backed securities that were designed to bring down long-term interest rates.
Overnight markets
Overview: US 10yr note futures are down -0.038% at 124-25, S&P 500 futures are up 0.06% at 2353.75, Crude oil futures are up 1.11% at $52.82, Gold futures are down -0.6% at $1249.8, DXY is up 0.05% at 101.23, CAD/USD is down -0.27% at 0.748.
US Economic Data
| 10:00 AM | Labor Market Conditions Index, Mar, est. 0.8 |
Canadian Economic Data
| 8:15 AM | Housing Starts, Mar, 253.7, est. 215.5k (prior 210.2k, revised 214.3k) |
| 10:00 AM | Bloomberg Nanos Confidence Index, (prior 58.7) |
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