cti2015header-morning comments web

Market Update

Treasuries open NY weaker after overnight drift into US 30Y $15B auction; 10Y note is at 1.515%. Traders believe Japanese interest could still show at today’s 1pm ET 30Y Us Tsy auction if say Japanese lifers left orders with the overseas desks given Japan holiday (they need duration). New Zealand central bank cut US key rate to an all time low of 2%; it also has an explicit easing bias. German govt debt and UK gilts mixed. German govt debt at first improved then saw sellers in light action. 

News headlines                                                                                        

  • Stocks choppy, Kiwi soars after rate cut (Reuters) World shares hovered close to one-year highs on Thursday as oil prices dropped for a third straight day and the latest interest rate cut in a developed market – this time New Zealand – got a lukewarm reaction from investors. The slip in crude markets left energy firms backpeddling, weighing on European equities .FTEU3 which, after early declines, nudged higher on sharp gains by consumer goods stocks. Asia and Wall Street had drifted lower overnight [.N].
  • IEA Sees Oil Glut Easing (Bloomberg) Global oil markets will continue to re-balance this year as a pick-up in demand from refiners absorbs record output from several Persian Gulf producers, the International Energy Agency predicted. Refiners around the world will process record volumes of crude this quarter as their intake rebounds after falling in the second quarter by the most since 2009, the Paris-based adviser said in its monthly report. That will shrink brimming crude stockpiles even as Saudi Arabia, Kuwait and the United Arab Emirates pump at all-time highs amid competition between OPEC nations to secure market share, according to the agency.
  • Exclusive: Iraq, oil companies agree to restart investment, boost output (Reuters) Iraq has reached agreement with BP, Shell and Lukoil to restart stalled investment in oil fields the firms are developing, allowing projects that were halted this year to resume and crude production to increase in 2017, Iraqi oil officials said. The agreements, reached in July and August, effectively delay to the second half of the year projects that the three companies had planned to carry out in the first half, which had been suspended because of low oil prices.
  • Valeant Slides on Report of Criminal Probe into Philidor Ties (Bloomberg) Valeant Pharmaceuticals International Inc. fell 9 percent in trading before U.S. exchanges opened following a report that it’s the target of a criminal probe. Federal prosecutors are investigating whether the drugmaker defrauded insurers by hiding its ties to a mail-order pharmacy, the Wall Street Journal reported Wednesday. Prosecutors are pursuing an unusual legal theory that Valeant and its mail-order pharmacy, Philidor Rx Services LLC, allegedly defrauded insurers by concealing their close relationship, the Journal said, citing unidentified people familiar with the matter.
  • Investors Have $100 Billion to Spend on Oil Assets No One Else Wants (Bloomberg) Since the great crash of oil in mid-2014, more than $100 billion has been raised by buyout firms and distressed-debt funds eager to scoop up energy assets on the cheap. But as the months rolled by, few opportunities cropped up as cash-starved drillers limped along with the help of their bankers. Not any more. What started out as a trickle has now turned into something much more, with Blackstone Group LP, Apollo Global Management LLC and WL Ross & Co. all jumping in this year to buy a grab bag of assets at discounted prices. Precise numbers are hard to come by, but in conversations with investors, bankers and analysts across the industry, there’s little doubt that private equity firms are ramping up their investments in everything from undrilled and developed oil and gas acreage to troubled loans.
  • EU’s bank rescue chief sees no exceptions to bail-in rules (Reuters) Creditors will be hit if a European bank fails and no exceptions to this ‘bail-in’ rule are being considered, the chief of the European Union’s bank rescue body said. Aimed at ending taxpayer-funded bail-outs, the bail-in regime, which could wipe out a bank’s debts and some deposits if a bank fails, caused a popular backlash even before it came into effect on Jan. 1, when some creditors of four Italian banks lost their savings when the lenders had to be rescued late last year.

Overnight markets

  • Overview: US 10yr note futures are down -0.0235% at 132-23, S&P 500 futures are up 0.21% at 2177.25, Crude oil futures are down -0.22% at $41.62, Gold futures are down -0.04% at $1351.3, DXY is up 0.14% at 95.784.

US Economic Data

  • 8:30 AM: Import Price Index, m/m, July, 0.1%, est. -0.40% (prior 0.20%)
    •      Import Price Index, y/y, July, -3.70%, est. -4.30%, (prior -4.80%)
    •      Initial Jobless Claims, August 6th,266k , est. 265k (prior 269k)
    •     Continuing Claims, July 30th, 2155k, est. 2133k (prior 2138k)
  • 9:45 AM: Bloomberg Consumer Comfort, August 7th, (prior 43)

Canadian Economic Data

  • 8:30 AM: New Housing Price Index, m/m, June, 0.1%, est. 0.30% (prior0.70%)

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