Market update

US tsys slightly higher, US 10Y 2.20%, better bid after 8:30 claims & import price data (import prices lower 12th straight month on y/y basis). Expect less of a concession going into 30Y auction at 1:00PM given solid 10Y yest (10Y reached 2.25% at 1:00PM auction time, rallied thru the close). Tsys were also pressured by a huge amt of IG corp issuance (over $40bln in 2 days, yest $13.6bln). Core Euro bonds outperforming, 10Y bund/tsy spd widest in 3 weeks – Apple & Shell set to price in EUR, Apple E1.5-2bln in another case of corp issuance to fund buybacks/dividends… In Canada, GOCs lower, provis 0.5bps wider with lower stocks. Yesterday saw solid outperformance in Cda leading up to BOC decision – after which CBGs tanked giving up ~7bp vs tsys by the close. Busy day in corps with Ford issuing $750mln (upsized) 5Y  @ 213 or ~ 5 bps back where we saw CAD 21s  -so at least 15 bps concession.. Needless to say the deal was well reciced with fills in the 25% area and bonds trading tighter in secondary.

News headlines

  • BOE Says Global Turmoil Hasn’t Shaken Its Economic Outlook (Bloomberg) Bank of England policy makers said the U.K. economy’s prospects remain positive and market turmoil related to China’s slowdown hasn’t shaken their view that the time for a rate increase is approaching.
  • Europe retreats as Fed uncertainty persists (FT) Rally. Retreat. Repeat. Volatility rules in equity markets amid continued uncertainty over China’s economy and US monetary policy, with many Asian and European stock barometers giving back chunks of the previous day’s sturdy gains.
  • Fed Wavers on September Rate Rise (WSJ) Federal Reserve officials aren’t near an agreement to begin raising short-term interest rates heading into a crucial week of private discussions before their Sept. 16-17 policy meeting, according to their recent comments.

Overnight markets

  • Overview: IG24 5Y 81.2/81.7 (+0.45), US 10yr note futures are down -0.13% at 127-08+, S&P 500 futures are down -0.58% at 1931.50, Crude oil futures are down -0.09% at 44.11, Gold futures are up +0.56% at $1108.2, DXY is down -0.10% at 95.916.
  • US BANK CDS (5yr): BAC 74/78 (+1), GS 91/95 (+0), MS 81/85 (+0), C 82/86 (+0), JPM 74/78 (+0), WFC 55/59 (+0)

US Economic Data

  • Initial jobless claims came in at 275K  for the week ending September 5th, equal to expected (275K) and lower than prior week (281K).
  • Continuing claims increased to 2260K from 2259K and slightly higher than expected (2253K).
  • Import price index came in at -1.8% MoM (-11.4% YoY) in August versus July -0.9% MoM (-10.5% YoY).
  • Wholesale Inventories are forecast at 0.3% MoM in July versus 0.9% MoM for previous month.
  • Wholesale trade sales are expected at 0.1% MoM in July lower than June 0.1% MoM increase.

Canadian Economic Data

  • New housing price index increased 0.1% MoM (+1.3% YoY) in July compared to June 0.3% MoM (1.3% YoY).
  • Capacity utilization came in at 81.3% in 2Q 2015, 1.3% lower than previous month.


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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230