cti2015header-morning comments web

Market update

US Tsys sharply lower/steeper, futures underperforming on high volume with 411K Sep 10Y contracts traded. Tsys lower with most global bonds as global stocks soar highlighted by the Nikkei’s 2.46% gain, 1.93% gain in Italy and 1.76% gain in Spain. USD mostly lower vs the majors though higher vs JPY, last 103.93. Commodities mixed, energy better, metals lower, gold off 0.56% at $1347.91 while grains are tiny mixed. MBS and US Swap spreads tighter. US Tsys 10Y opened 1.4235% vs 1.432% at 3:00 pm ET on Monday. It was pretty much straight south for the Tsy mkt from the getgo largely as oil was on a tear higher. Fed Mester again was on the tape, repeating commentary from Monday.

News headlines

  • Stocks Advance on Stimulus Bets as Investors Bail on Bonds, Yen (Bloomberg) Global stocks advanced for a fourth day and commodities rose, buoyed by the prospect of stimulus in major economies. Government bonds sank with the yen. The MSCI All-Country World Index reached its strongest level since June 24, and the yen had its biggest two-day slide since 2014 after Japanese Prime Minister Shinzo Abe vowed to speed up efforts to defeat deflation. The pound rose for a third day as Home Secretary Theresa May prepared to take over as the U.K.’s next prime minister. Daimler AG led gains in European stocks and credit markets strengthened after earnings that beat analysts’ predictions. U.S. crude rebounded from a two month low.
  • Carney Defends BOE Against ‘Extraordinary’ Brexit Accusations (Bloomberg) Mark Carney denied that the Bank of England undermined its independence by highlighting the risks of a British decision to quit the European Union in the run-up to the referendum. “It’s extraordinary, in all senses of the word,” the BOE governor responded when asked by U.K. lawmakers on Tuesday whether he helped shape the views of financial-stability officials. “That’s not the way the committee works. The chair doesn’t guide conclusions.”
  • Futures rise a day after S&P 500 hits record high (Reuters) U.S. stock index futures were higher on Tuesday, a day after the S&P 500 .SPX hit a record high as investor optimism was propelled by a set of strong economic data. The benchmark index, which came close several times this year to topping its May 2015 record, finally broke through on Monday to a new high of 2,143.16.
  • Japan to craft stimulus by end-July, may issue construction bonds (Reuters) Japanese Prime Minister Shinzo Abe on Tuesday told his economy minister to compile an economic stimulus package by the end of this month to revive a flagging economy in the face of sluggish private consumption and investment. On Monday, after a landslide victory in Upper House elections and as evidence mounted the corporate sector is floundering due to weak demand, Abe ordered a new round of fiscal stimulus spending.
  • May ally says Britain to trigger EU divorce ‘when we’re ready’ (Reuters) Britain will not rush to trigger divorce proceedings with the European Union, a leading ally of incoming Prime Minister Theresa May said on Tuesday as David Cameron bowed out at his final cabinet meeting. May, 59, will on Wednesday replace Cameron, who is resigning after Britons rejected his advice and voted on June 23 to quit the EU, plunging the country into political and economic uncertainty.
  • Merkel urges Britain to quickly clarify relationship with EU (Reuters) German Chancellor Angela Merkel said on Monday access to the European Union’s single market meant accepting the bloc’s basic freedoms and rejected suggestions from London that Britain could retain full EU market access while curbing immigration. Speaking at the annual diplomatic corps reception in Meseberg, north of Berlin, Merkel said Britain should clarify quickly how it wants to shape its future relationship with the EU, adding she wanted London to remain an important partner.
  • Bank Demand for BOE Liquidity Rises as Brexit Fears Linger (Bloomberg) Banks’ demand for cash increased in the Bank of England’s third liquidity operation since the U.K. vote to leave the European Union sparked financial market turmoil. At the auction of funds in exchange for collateral, 19 days after Britain opted for a so-called Brexit, banks were allotted 2.005 billion pounds ($2.7 billion). That compared with 3.1 billion pounds at a sale in the days following the vote and 1.35 billion pounds last week. The allotment matches the banks’ bids.


Overnight markets

  • Overview: US 10yr note futures are down -0.2347% at 132-27, S&P 500 futures are up 0.43% at 2139.5, Crude oil futures are up 2.61% at $45.93, Gold futures are down -0.73% at $1346.7, DXY is down -0.29% at 96.288.

US Economic Data

  • 10:00 AM: Wholesale Inventories, m/m, May,  est. 0.2% (prior 0.6%)
    • Wholesale Trade Sales, m/m, May, est. 0.5% (prior 1.0%)
    • JOTLS Job Openings, May,  est. 5650 (prior 5788)

 Canadian Economic Data

  • There is no major economic data 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