Market Update
US tsys trading higher after weaker than exp July CPI & core CPI – both 0.1% vs exp 02%, US 10Y 2.19% (-1.7bps). Tokyo closed for holiday. In Europe tsys lagged bunds which are 2-3bps lower, 10Y bund 0.38% lowest since June 28th. European equities lower for a third day, S&P futures extending gains after CPI, gold higher for a third day, 2% this week on geopolitical risks & low inflation. GOCs lower, spds ~2bps wider vs tsys, 10Y 1.854% (+0.7bps). Provincials closed 1-1.5bps wider yest on risk off, Ont 27s 70/69.5 , 1bp wider on the week on little trade.
News headlines
Stock Selloff Deepens on Korea Tension; Oil Slides: Markets Wrap (Bloomberg) European stocks tumbled to a five-month low as volatility soared amid rising tensions over North Korea’s nuclear program. The dollar edged stronger as investors awaited the release of U.S. inflation data.
IEA says strong oil demand growth helping market rebalance (Reuters) World oil demand will grow more than expected this year, helping to ease a global glut despite rising production from North America and weak OPEC compliance with output cuts, the International Energy Agency said on Friday.
Bank of England’s Saunders sees growth holding up: Evening Standard (Reuters) Britain’s economy is likely to hold up despite uncertainty about Brexit, and the jobless rate will probably fall further, according to one of the two Bank of England policymakers who are pushing to raise record-low interest rates.
China should be neutral if North Korea fires first on U.S.: Global Times (Reuters) China should remain neutral if North Korea launches an attack that threatens the United States, a Chinese state-run newspaper said on Friday, sounding a warning for Pyongyang over its plans to fire missiles near the U.S. Pacific territory of Guam.
Telus signs up 99,000 new postpaid wireless customers in Q2 (BNN) Telus Corp, one of Canada’s biggest telecom companies, reported a smaller-than-expected profit on Friday, as higher costs and weak growth in its wireline unit offset gains from its national wireless business
Magna posts 2.5% rise in sales on higher demand (BNN) Canadian auto parts maker Magna International Inc (MG.TO) (MGA.N) reported a 2.5 per cent rise in quarterly sales, helped by higher demand. Net income attributable to Magna rose to US$561 million, or US$1.48 per share, in the second quarter ended June 30, from US$558 million, or US$1.41 per share, a year earlier.
Overnight markets
Overview: US 10yr note futures are up 0.062% at 126-21, S&P 500 futures are up 0.12% at 2440.5, Crude oil futures are down -0.33% at $48.43, Gold futures are up 0.49% at $1296.4, DXY is down -0.39% at 93.04, CAD/USD is down -0.43% at 0.7881.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.221% | 2 Year | 1.318% |
| 5 Year | 1.484% | 5 Year | 1.768% |
| 10 Year | 1.867% | 10 Year | 2.205% |
| 30 Year | 2.306% | 30 Year | 2.8% |
US Economic Data
| 8:30 AM | CPI, m/m, Jul, 0.1%, est. 0.2% (prior 0.0%) |
| CPI Ex Food and Energy, m/m, Jul, 0.1%, est. 0.2% (prior 0.1%) | |
| CPI, y/y, Jul, 1.7%, est. 1.8% (prior 1.6%) | |
| CPI Ex Food and Energy, y/y, Jul, 1.7%, est. 1.7% (prior 1.7%) | |
| Real Avg Weekly Earnings, Jul, 1.1%, (prior 1.1%, revised 1.2%) | |
| Real Avg Hourly Earning, y/y, Jul, 0.7%, (prior 0.8%, revised 0.9%) |
Canadian Economic Data
There is no major economic data release 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