cti2015header-morning comments web

Market update

Tsys little changed in range bound session , avg volume in TY futures (278k), US 10Y 1.77%. The USD is lower for the first time in a week, Euro stoxx are down 1.0%, led by 2.0% decline in banks. Core Euro bonds slightly lower, UK gilts giving up early gains on lower than exp increase in March industrial prod. Order book for ultra long 50Y from Apsin said to exceed E10bln at MS + 250.  Focus in the US today will be on $23bln 10Y auction at 1:00PM as well as IG corp supply after ~$24bln priced yest including $7bln multi tranche offering from Abbvie (Baa2/A-) & $5bln from Kraft (Baa3/BBB-). Issuance so far this week in the US has already surpassed the YTD avg of $35bln after two trading days. GOCs higher led by 10s, spds 1bp narrower vs tsys, 10Y close to 1.30% resist from mid April. Provi spds 0.5bps wider, supply a possibility yet with GOC yields and spds fairly tight, there is likely to be only lukewarm reception to a 10Y deal , thou with 10s30s steepening into June 1st extension a long deal might have better success at this point.

News headlines

  • Europe Stocks Drop With U.S. Futures as Banks Slip; Pound Falls (Bloomberg) European equities fell for the first time in three days and U.S. stock index futures declined, as banks and energy producers slid. Shares of raw-materials companies rallied as metals prices climbed. The Stoxx Europe 600 Index headed for its biggest drop in a week. Industrial metals from aluminum to zinc climbed as Glencore Plc forecast demand to exceed supply. Soybeans, silver and gold also gained, while crude pared declines before U.S. inventories data. The pound weakened after disappointing U.K. industrial production data. Spain is selling 50-year bonds, amid a flurry of debt offerings. A Paris-listed exchange-traded fund tracking Brazilian shares rose before the Senate votes on whether to impeach President Dilma Rousseff.
  • UK factory output records biggest annual fall since 2013 (Reuters) British factory output recorded its biggest annual fall in nearly three years in March, as shutdowns in the steel industry due to global overcapacity led broad-based declines, official figures showed on Wednesday. Manufacturing in March was 1.9 percent lower than a year earlier, the steepest decline since May 2013, the Office for National Statistics said and in line with economists’ predictions in a Reuters poll. In March alone, manufacturing output edged up by 0.1 percent, slightly less than forecast, after dropping by 0.9 percent in February.
  • Pound Bears Return as Industrial Data Add to U.K. Economy Woes (Bloomberg) Pound bears revived their attack as industrial production data added to signs that problems are mounting for the economy as Britain heads toward a referendum on whether to end its membership of the European Union. Sterling weakened for the first time in three days versus the euro as figures from the Office for National Statistics showed output rose 0.3 percent, less than the 0.5 percent gain predicted in a Bloomberg survey of economists. Factories also increased production by less than forecast. The Bank of England announces its interest-rate decision and releases its latest economic and inflation forecasts on Thursday.
  • Oilsands production north of Fort McMurray will restart in coming days when ‘safe to do so’ (Financial Post) Production will resume at oilsands projects north of Fort McMurray in the coming days and “short weeks” after an out-of-control wildfire raged through the area, though there is still no timeline for projects south of the city returning to normal operations. “Operations will only restart when it is absolutely safe to do so,” Alberta Premier Rachel Notley said Tuesday after a meeting with the CEOs of oilsands, pipeline and power companies with assets around Fort McMurray.
  • Oil dips on Canada output prospects, record U.S. stocks (Reuters) Crude prices fell on Wednesday as oil sands production in Canada restarted after forced closures due to wildfires, and as already record-high inventories especially in the United States grew. International Brent crude oil futures LCOc1 were down 28 cents at $45.24 per barrel at 0909 GMT. U.S. West Texas Intermediate (WTI) futures CLc1 were down 44 cents at $44.22 a barrel.
  • Competition Bureau seeks Canadians’ opinions on BCE proposal to buy Manitoba Telecom Services (Financial Post) The Competition Bureau is asking Canadians for their thoughts on BCE’s proposed deal to buy Manitoba Telecom Services. The federal regulator is reviewing the proposed takeover as well as a side agreement that would see BCE sell a portion of the MTS wireless business to Telus (TSX:T). The bureau says comments can be shared with the regulator through its website.
  • Brazil Impeachment Vote May Spell Rousseff’s Last Day on Job (Bloomberg) This Wednesday may be the last day in office for President Dilma Rousseff, as Brazil’s Senate gears up for a vote that would force her out and into an impeachment trial she appears unlikely to survive. The Senate debate is scheduled to last 10 hours and end with a vote around 7 p.m. local time, the chamber’s speaker Renan Calheiros said. Surveys by the country’s major newspapers show the opposition has 50 or 51 votes, more than the simple majority of the 81 seats necessary to put her on impeachment trial.


Overnight markets 

  • Overview: US 10yr note futures are up 0.0119% at 130-26, S&P 500 futures are down -0.11% at 2075.25, Crude oil futures are up 0.18% at $44.74, Gold futures are up 1.11% at $1278.9, DXY is down -0.33% at 93.977.

US Economic Data 

  • 7:00 AM: MBA Mortgage, 0.4% (prior -3.4%)
  • 2:00 PM: Monthly Budget Statement, April,  est. 107.0b (prior 156.7b)

 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