Market update

US tsys opening higher, US 10Y 1.84 (-5.3bps) after second Yuan devaluation in as many days. Volume in tsy futures o/n said to be very high according to MNI. Tsys off the o/n highs on reports China bought its currency in an effort to stem the decline. Crude trading higher, despite IEA report of oil glut (see above). Core EU bond yields lower led by UK gilts, yet underperforming tsys. The US auctions $24bln in 10Y notes this aft after a solid 3Y auction yest, after short end yields had rallied ~5bps on the China deval. The total refunding package actually pays down $3.25bln which further supports today’s and Thurs 30Y auctions.GOCs trading higher, spds ~2bps wider vs tsys in the rally , with the 10Y butt the narrowest in four months. Provis ~1-1.5bps wider, Ont 45s trading down at 91, Ont 45/25 roll 12.5/12.1.

News headlines

  • Asian currencies hit new multiyear lows (FT) Losses for emerging market currencies accelerated on Wednesday, touching new multiyear lows after China’s authorities once again allowed the renminbi to weaken further.
  • Tougher bank rules hit bond market trading, report says (FT) A report on deteriorating bond market trading conditions commissioned by two of the financial industry’s biggest lobbying groups has urged regulators to ameliorate the “liquidity” crunch by revisiting parts of the post-financial crisis supervisory framework.

Overnight markets

  • Overview: IG24 5Y 76.05/76.3 (+0.92), US 10yr note futures are up +0.20% at 128-03+, S&P 500 futures are down -0.71% at 2065.0, Crude oil futures are up +1.44% at 43.70, Gold futures are up +0.95% at $1118.2, DXY is down -1.04% at 96.280.

 US Economic Data

  • MBA mortgage applications came in this morning at +0.1% for the week ending August 7, versus prior week 4.7% increase.
  • JOLTs job openings are forecast at 5350 in June compared to May 5363.
  • Monthly budget statement is forecast at -$138.0B in July versus $94.6B in June.

Canadian Economic Data

 Teranet/National bank housing price index for the month of May came in at 1.2% MoM and 5.1% YoY.



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