cti2015header-morning comments web

Market Update

US tsys higher, yields 2-4bps lower, curve flatter with the 10Y 2.33 (-4.4bps). Tsy prices off the highs after initial claims/import pricesGerman bunds weaker due to Italian govt supply. Tsys were higher in Asia on risk off buying after Trump press conf did not address infrastructure spending. Fed Evans & Lockhart will appear on a panel at 8:30am to discuss economic policy while the US auctions $12bln in 30Y bonds after a very well received 10Y yest (3bps thru). GOCs higher led by 10s which are ~3bps tighter on the curve, GOC 10Y 1.66%. Provis opening with a weaker bias after closing 1bp wider yest as GOCs rallied following trump & Mani 10Y y which seemed to compete with a slew of corp supply . Algonquin Power priced $300mln tens @ 243.7 which closed 232 bid, strong demand with 5% fills. Riocan issued $300mln Oct 22s at 160 (155 OTC) after being upgraded by S&P in Dec, also well received closign 5bps tighter on low fills.

News headlines 

Dollar Slumps, Bonds Rally as Trump Bets Unwind: Markets Wrap (Bloomberg) The dollar slid and Treasuries gained with commodities as Donald Trump’s press conference sent a wake-up call to the market about exalted expectations for fiscal stimulus in the U.S. Gold advanced. The U.S. currency slumped against all major peers and the 10-year Treasury yield touched the lowest since November as Trump’s first press conference since his election victory gave scant detail on policy.

Euro zone economy registering surprisingly strong growth spurt (Reuters) Industries across the euro zone cranked up output in November and Germany ended the year with its strongest growth in five year, data showed on Thursday, pointing to an economic spurt that may be arriving earlier than some ECB policymakers expect.

China banks extend record 12.65 trillion yuan in loans in 2016 as debt worries mount (Reuters) China’s banks extended a record 12.56 trillion yuan ($1.82 trillion) of loans in 2016 as the government encouraged more credit-fueled stimulus to meet its economic growth target, despite worries about the risks of an explosive jump in debt.

Mark Carney signals Bank of England may raise forecast for UK economy (TheGuardian) The Bank of England looks set to upgrade its forecasts for the UK economy after admitting that some of the risks posed by the Brexit vote last June have now receded. Giving evidence to the Treasury select committee, governor Mark Carney said the Bank’s actions to avoid a market meltdown after the referendum were a key reason why Threadneedle Street might be raising its forecasts for a second time.

Toronto housing boom to continue as Vancouver slumps (TheGlobeAndMail) Canada’s two largest housing markets are going in different directions, with the Greater Toronto Area poised for another rally in 2017 while the Vancouver region girds for a decline. Royal LePage forecasts the median residential price in the GTA will jump 10 per cent this year while Greater Vancouver will experience an 8.5-per-cent price decrease for various housing types.

Magna expects sales growth to outperform, eyes building vehicles for new industry players (Financial Post) Canadian auto-parts giant Magna International Inc. expects its sales growth to outperform the market over the next three years and sees particular opportunity in manufacturing complete vehicles for new industry players that have never built a car before.

 Overnight markets

Overview: US 10yr note futures are up 0.1753% at 125-1, S&P 500 futures are down -0.23% at 2265.25, Crude oil futures are up 1.61% at $53.09, Gold futures are up 0.38% at $1201.2, DXY is down -0.75% at 101.02, CAD/USD is down -0.69% at 0.7642.

US Economic Data 

8:30 AM Import Price Index, m/m, Dec, 0.4%, est. 0.7% (prior -0.3%, revised -0.2%)
Import Price Index, y/y, Dec, 1.8%, est. 1.8% (prior -0.1%, revised 0.1% )
Initial Jobless Claims, Jan 7, 247k,  est. 255k (prior 235k, revised 237k)
Continuing Claims, Dec 31, 2087k, est. 2087k (prior 2112k, revised 2116k)
Philadelphia Fed Index Revisions
9:45 AM Bloomberg Consumer Comfort Index, Jan 8, (prior 45.5)
2:00 PM Monthly Budget Statement, Dec, est. -26.0b (prior -136.7b)

Canadian Economic Data 

8:30 AM New Housing Price Index, m/m, Nov, 0.2%, est. 0.3% (prior 0.4%)
New Housing Price Index, y/y, Nov, 3.0%, est. 3.1% (prior 3.0%)

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