Market update
US tsys higher, curve flatter with long bonds out performing, US 10Y below 2.2% (2.195 -2.6bps), tsys bid despite stronger PPI (unch vs -0.1% exp, core 0.3% vs 0.1% exp). Light volume o/n in tsy futures with FOMC decision looming next week. Core EU bonds higher led by 10Y bunds on ECB Coeure dovish QE comments (see above). Euro stocks lower, USD higher, gold & crude lower on risk off. GOCs higher, lagging tsys. Provis Ont/QC spds tighter in 5s, unch in longs as supply exp. – Ont 46s 100.5/99.5, Ont 45/25 bx 11.5/11.3 unch. QC 48 deal still widely expected.
News headlines
- No Hard Landing for China, Premier Says (WSJ) Chinese Premier Li Keqiang told Chinese and foreign executives that China’s economy is in good hands, reforms are on track and recent volatility wouldn’t affect the country’s economic trajectory.
- Euro zone growth is reportedly still too weak to create enough jobs (BI) Economic growth in the euro zone is still too weak to create a sufficient number of jobs, European Central Bank Executive Board member Benoit Coeure told a French newspaper group EBRA on Friday.
- One Volatile Week Could Seal Fed Stance After Years of Low Rates (Bloomberg) Call it the tail wagging the dog. After holding interest rates at rock-bottom levels since 2008 to support the U.S. economy, the Federal Reserve’s decision whether to raise them this month may boil down to what happens in financial markets during the next five trading days.
- Oil prices could sink to $20 a barrel, warns Goldman (Marketwatch) The global supply glut in the oil market is even bigger than expected and could push prices to as low as $20 a barrel, Goldman Sachs warned in a report on Friday.
- Why investors are overlooking Canadian banks’ better-than-expected performance (FP) Canadian banks may have reported better-than-expected third-quarter results, but the market doesn’t seem to care, partly because the outlook for bank stocks is anything but strong for the coming months given that the country’s economy slipped into a recession and oil prices are stuck deep in bear market territory.
Overnight markets
- Overview: IG24 5Y 80/80.5 (+0.38), US 10yr note futures are up +0.14% at 127-10+, S&P 500 futures are down -0.27% at 1934.50, Crude oil futures are down -2.29% at 44.87, Gold futures are down -0.40% at $1104.9, DXY is up +0.15% at 95.601.
- US BANK CDS (5yr): BAC 75/79 (+1), GS 92/96 (+0), MS 82/86 (+0), C 83/87 (+0), JPM 75/79 (+0), WFC 56/60 (+0)
US Economic Data
- PPI came in at 0.0% MoM (-0.8% YoY) in August versus July 0.2% MoM (-0.8% YoY).
- PPI core decreased 0.3% MoM (+0.9% YoY) in August compared to previous month 0.3% MoM (0.6% YoY).
- University of Michigan confidence (P) is expected at 91.1 in September 0.8 point lower than previous month.
- Monthly budget statement is forecast at -$77.5B in August versus -$149.187B in July.
Canadian Economic Data
- There is no major economic data 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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230