cti2015header-morning comments web

Market update

Tsys trading lower, curve slightly flatter, US 10Y 1.76 (+1bp), with Euro stoxx higher yet off earlier highs after coming down hard ~7:00AM, the USD index higher for a sixth day, crude up slightly 43.88. The US sells $24bln in 3Y notes at 1:00PM, with the WI 3Y 0.88%, trading close to the 0.89% of the last 3Y sale on April 12th  – which was the lowest auction yield since Feb. GOCs higher in line with tsys, provi spds unch after closing 1-2bps wider yest. In corps, Allied Properties (BBBL) issued $150MM 6.5Y 3.934% debs @ 300 OTC (original guidance ~305) which quickly narrowed 5-7 bps in secondary trading, proceeds will be used to fund recent acquisition of several properties in Montreal. Allied last came to market last May with its first 5Y issue @ 270 (now ~240).

News headlines

  • Global Stocks Rise With Commodities; Yen, Treasuries Decline (Bloomberg) Stocks rose around the world as base metals clawed back some of Monday’s losses. The yen and Treasuries declined. The MSCI All Country World Index’s 0.2 percent gain was its biggest in a week as Credit Suisse Group AG boosted European banks and Japanese shares rose. Nickel led a rebound in a Bloomberg measure of raw-materials prices as Japan’s largest supplier forecast a widening shortage. Philippine’s peso jumped the most in seven weeks after Rodrigo Duterte called for “healing” after claiming victory in a presidential election and trading Europe signaled Brazilian markets would rebound as the move to oust President Dilma Rousseff appeared back on track.
  • Yen Falls a Second Day as Japan Reiterates Ability to Intervene (Bloomberg) The yen weakened for a second day after Japan’s Finance Minister said the government can intervene to stabilize foreign-exchange markets if necessary. Japan’s currency fell against all its Group-of-10 peers after Taro Aso, speaking in parliament in Tokyo Tuesday, reiterated that the U.S. doesn’t object to the Asian nation’s policy. His comments came a day after he said “it’s natural that Japan has means to intervene” in the foreign-exchange markets.
  • French growth seen cooling in second-quarter, full-year outlook brighter (Reuters) French growth will slow in the second quarter after a strong start to the year, the central bank forecast on Tuesday, but surveys showing a pick up in industrial activity and investment means Paris’s full-year target still looks within reach. The socialist government has banked on a growth rate of 1.5 percent this year to start making a significant dent in unemployment, which at over 10 percent stands in the way of President Francois Hollande’s bid for a second term next year.
  • Dead-of-Night Reversal Puts Brazil Impeachment Back on Track (Bloomberg) The drive to oust President Dilma Rousseff is back on track after the head of the lower house reversed a decision that had earlier threatened to throw the entire impeachment process into chaos. Lawmaker Waldir Maranhao released a statement in the dead of night revoking his own call to annul impeachment sessions in the lower house. That puts the Senate back in the spotlight, with a vote on whether to put the unpopular president on trial still slated for Wednesday. If successful, it would temporarily remove her from office. Rousseff is charged with illegally using state banks to plug a hole in the budget.
  • Exclusive: Say goodbye to OPEC, Russia’s Sechin says (Reuters) Internal differences are killing OPEC and its ability to influence the markets has all but evaporated, top Russian oil executive Igor Sechin told Reuters in some of his harshest remarks ever about the oil cartel. Russia, which has been hit hard by the oil price collapse, was flirting with the idea of cooperating with OPEC in recent months until tensions between OPEC members Saudi Arabia and Iran ruined a global deal to freeze output.
  • CMHC continues to reduce its exposure to the housing market (Financial Post) Canada Mortgage and Housing Corp., the Crown corporation that controls a majority of the mortgage default insurance market in the country, continues to reduce its exposure to the housing market. In its annual reported released Monday, CMHC said its mortgage loan insurance-in-force decreased to $526 billion last year from $543 billion at year-end 2014. It is legislative maximum $600 billion, which had been approaching in previous years.
  • Eurozone ministers to examine how to ease Greece’s debt burden (TheGuardian) Eurozone finance ministers have promised to examine how to ease Greece’s colossal debt burden, with writing off bad loans remaining off the table.  Jeroen Dijsselbloem, the chair of eurozone finance ministers, said he was hopeful of getting an agreement on Greek debt management in talks on 24 May. Ahead of that meeting, technical experts have been asked to examine how to reduce Greece’s crushing debt burden, which is currently about 180% of the country’s annual economic output


Overnight markets 

  • Overview: US 10yr note futures are up 0.0358% at 130-27, S&P 500 futures are up 0.38% at 2062, Crude oil futures are up 0.39% at $43.61, Gold futures are down -0.09% at $1265.4, DXY is up 0.08% at 94.201.

US Economic Data 

  • 6:00 AM:   NFIB Small Business Economic Trends Survey, April, 93.6, est. 93.0 (prior 92.6)
  • 10:00 AM: Wholesale Inventories, m/m, March, est. 0.1% (prior -0.5%)
    •        Wholesale Trade Sales, m/m, March, est. 0.5% (prior -0.2%)
    •        Job Openings & Labor Turnover Survey, March, est. 5450  (prior 5445)

 Canadian Economic Data 

  • There is no major economic data for today


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