Market update
US tsys trading lower, US 10Y 2.195 (+2bps), curve 1bp flatter as short end underperforms before $24bln 3Y note auction this aft. European equities ~2.0% higher led by exporters with crude slightly higher after plunging ~3.0% to the lowest since 2003. Core Euro bonds lower led by 10Y bunds +3 bps @ 0.57% – weighed by issuance after supply from Nether, Austria, Spain as well as 10Y German linker. GOCs opening lower, unch vs tsys. Provis seeing some early buying on screens – Ont 46 up @ 113.5, Ont 25s @ 103, Qc/Ont 25 rl @ 3.5/3.0. Wouldn’t be surprised to see an issue given all in yields and positive tone after 3 day ~6bp widening.
News headlines
- Surging Yuan Borrowing Costs in Hong Kong: What You Need to Know (Bloomberg) Hong Kong Interbank Offered Rates for yuan loans jumped by records to all-time highs across all tenors on Tuesday as intervention by China to support its exchange rate tightened the currency’s supply in the offshore market.
- Oil prices near $30 as selling continues (FT) As traders bet on lower prices, Brent crude fell by more than 2 per cent to $30.43 a barrel, extending losses over the first seven trading sessions of 2016 to 18.4 per cent. The international oil marker later steadied to trade at $31.65, up 0.1 per cent.
- Nigeria Says OPEC May Meet Soon as Oil Even Hurting Saudis (Bloomberg) OPEC will soon make efforts to convene before the next scheduled meeting in June as the slump in oil prices is hurting producers, including the world’s biggest exporter, Saudi Arabia, said Emmanuel Kachikwu, Nigeria’s minister of state for petroleum resources. Members are already engaged in informal discussions with some non-OPEC producers, including Russia, to join any future production cut to shore up prices, he said.
- British Pound Hammered: UK Industrial Production of -0.7% Is Lowest Figure Since 2012 (PoundSterling) The pound has weakened even further following a significant drop in Industrial and Manufacturing Production data, as analysts push back their forecasts of when the BOE is most likely to raise rates.
- Alcoa Swings to a Loss on Charges (WSJ) Alcoa Inc. swung to a loss in its fourth quarter on restructuring charges and its revenue fell 18% compare with a year ago amid sharply lower aluminum prices. Overall, the metals maker reported a fourth-quarter net loss of $500 million, or 39 cents a share, compared with a year-earlier profit of $159 million, or 11 cents a share, a year earlier. Excluding $565 million in restructuring-related costs and other items, adjusted per-share earnings fell to 4 cents from 33 cents a year ago.
- Tesla chief Elon Musk says Apple is making an electric car (BBC) Tesla Motors CEO Elon Musk thinks it’s pretty obvious that Apple is working on its own electric car, and that the iPhone maker would be a really good auto manufacturer, too. « It’s quite hard to do, but I think companies like Apple will probably make a compelling electric car. It seems like the obvious thing to do, » Musk said during the interview. « It’s pretty hard to hide something if you hire over 1,000 engineers to do it. »
Overnight markets
- Overview: US 10yr note futures are down -0.16% at 127-05, S&P 500 futures are up +0.97% at 1932.75, Crude oil futures are up +1.21% at 31.77$, Gold futures are down -0.90% at $1086.30, DXY is up +0.25% at 98.971.
US Economic Data
- United States NFIB Business Optimism Index below forecasts (95.4) in December: Actual (95.2)
- November JOLTS (job openings) report will be released at 10am
- January IBD/TIPP Optimism Index in the United States will be released at 10am
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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230