Market Update

Tsys lower, US 10Y 2.56% (+0.4bps), off the lows after surprise drop in Dec PPI (-0.1% vs 0.25 exp). Tsys lower o/n on ECB headlines guidance could shift in early 2018, bund yields 2-5 bps higher led by the 5Y sector, large volume going thru in Dec8 euribor contract following the 7:30EST comments.  News that Walmart is raising its hourly wage to $11, giving out $1,000 in bonuses due to tax overhaul also pressuring tsys. US auctions $12bln in 30Y bonds at 1:00PM. GOCs lower, 2bps wider vs tsys, with the 10Y 2.19% after reaching 2.23% yest before the NAFTA headlines hit the tape. Odds of rate hike next week scaled back to ~80% from 92% yest morn. Provi spreads ~2bps wider yest on NAFTA concerns, Quebec/ont narrower, -3bps at a new low. 

News headlines

Euro Gains on ECB Minutes as Stocks Dip; Oil Rises: Markets Wrap (Bloomberg) The euro jumped after minutes from the European Central Bank’s December meeting, weighing on stocks in the region as investors struggled to put Wednesday’s turbulence behind them. U.S. equity futures rose, Treasuries steadied and oil hit a three-year high.

Canada Raises Alarm on Trump Leaving Nafta (Bloomberg) Canadian government officials said there’s an increasing likelihood U.S. President Donald Trump will give six-months’ notice to withdraw from Nafta, dragging down the loonie, yields on government bonds and Mexico’s peso.

Cryptocurrencies Retreat Amid Concern of South Korean Clampdown (Bloomberg) Bitcoin slumped as South Korea’s justice minister reiterated his proposal to ban local cryptocurrency exchanges, fueling concern that a government crackdown will erode one of the world’s biggest sources of demand for digital currencies.

U.S. import prices barely rise; wholesale inventories rebound (Reuters) U.S. import prices recorded their smallest increase in five months in December and underlying imported price pressures were muted amid declining costs for food and consumer goods.

No Deal Brexit Could Cost 482,000 Jobs as City Recruitment Slows (Bloomberg) Leaving the European Union without a deal in 2019 could cost Britain almost half a million jobs, a report found as London’s key finance industry vacancies also plummeted the most in three years.

IBM to reassign 30 percent of staff in 2018: The Register (Reuters) International Business Machines Corp plans to reassign up to 30 percent of staff in its 103,000 computer service delivery business this year with job losses through attrition of around 10,000, technology website The Register reported on Thursday, citing unnamed company insiders.

Canada building permits fall in Nov on fewer nonresidential plans (Reuters) The value of Canadian building permits tumbled more than expected in November on fewer plans for commercial and industrial buildings, though intentions for single-family homes edged up, data from Statistics Canada showed on Wednesday.

Overnight markets

Overview: US 10yr note futures are down -0.025% at 122-31, S&P 500 futures are up 0.17% at 2755.25, Crude oil futures are up 0.47% at $63.87, Gold futures are up 0.23% at $1322.4, DXY is down -0.25% at 92.101, CAD/USD is down 0% at 0.797.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.779% 2 Year 1.968%
5 Year 1.984% 5 Year 2.326%
10 Year 2.193% 10 Year 2.553%
30 Year 2.414% 30 Year 2.898%

US Economic Data

8:30 AM PPI Final Demand MoM, Dec -0.1% est 0.2% (0.4% prior)
  PPI Ex Food and Energy MoM, Dec -0.1% est 0.2% (0.3% prior)
  PPI Ex Food, Energy, Trade MoM, Dec 0.1% est 0.2% (0.4% prior)
  PPI Final Demand YoY, Dec 2.6% est 3.0% (3.1% prior)
  PPI Ex Food and Energy YoY, Dec 2.3% est 2.5% (2.4% prior)
  PPI Ex Food, Energy, Trade YoY, Dec 2.3% (2.4% prior)
  Initial Jobless Claims, Jan 6th 261k est 245k (250k prior)
  Continuing Claims, Dec 30th 1867k est 1920k (1914k prior)
9:45 AM Bloomberg Consumer Comfort, Jan 7th (51.8 prior)
14:00 PM Monthly Budget Statement, Dec est -26.0b (-138.5b prior)

Canadian Economic Data

8:30 AM New Housing Price Index MoM, Nov 0.1% est 0.2% (0.1% prior)
  New Housing Price Index YoY, Nov 3.4% (3.5% prior)



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, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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