Market Update
- Treasuries opened higher after overnight buying. Treasuries rally on fast money short-covering after weak early data: those who positioned cautiously and bond-bearish into retail sales must now cover shorts, some traders also reported profit-taking. However, Treasuries rally more on a second buying leg, after brief mild profit-taking followed post-PPI, retail sales data and first wave of program buyers.
News headlines
- Stocks Set for Weekly Gain With Oil as Krone, Loonie Strengthen (Bloomberg) Global stocks headed for the biggest weekly gain in a month as increases in oil prices bolstered investor confidence. Norway’s krone led the currencies of crude-exporting nations higher. The MSCI All Country World Index held near a one-year high on Friday, while U.S. equity index futures were little changed after American benchmarks rallied to records on Thursday.
- Italian Economy Unexpectedly Stagnates in Threat to Renzi (Bloomberg) Italy’s economy unexpectedly stalled in the second quarter, which will further weigh on Prime Minister Matteo Renzi as he prepares for a referendum on which he has staked his political future. Gross domestic product was unchanged in the three months through June, Rome-based statistics agency Istat said in a preliminary report on Friday. That compares with the 0.2 percent median estimate in a Bloomberg survey of 25 analysts. The economy grew 0.7 percent from a year earlier.
- German Economy Slows Less Than Forecast as Italian Growth Stalls (Bloomberg) German growth slowed less than predicted in the second quarter while Italian output unexpectedly stagnated, signaling diverging fortunes for two of the region’s biggest economies as they brace for any fallout from Britain’s decision to leave the European Union. Germany’s gross domestic product rose a seasonally-adjusted 0.4 percent in the three months through June, following an increase of 0.7 percent, the Federal Statistics Office in Wiesbaden said on Friday. That’s twice the rate economists forecast in a Bloomberg survey. Italy’s economy unexpectedly stalled after expanding 0.3 percent in the previous quarter. Analysts predicted growth of 0.2 percent.
- Dollar steadies, eyes on U.S. retail sales (Reuters) The dollar held steady at the end of a week dominated by flows into higher-risk currency plays like the Australian and Canadian dollars on Friday, helped by a call for a rise in U.S. interest rates by San Francisco Federal Reserve chief John Williams. The major currencies that carry marginally higher interest rates and are most closely aligned with commodity markets have all performed strongly this week as investors sought higher-yielding investments.
- JPMorgan to Liquidate Japan Fund After ‘Significant’ Redemptions (Bloomberg) JPMorgan Chase & Co.’s investment unit said it will liquidate a Japan-focused fund after a surge of investor withdrawals following poor performance. JPMorgan Funds – Japan Market Neutral Fund, launched in June 2011, will liquidate after assets dipped to about $17 million as of Aug. 4 following “significant redemptions” in recent months, the firm said in a letter to investors, a copy of which was obtained by Bloomberg News. The fund has lost a cumulative 16 percent since inception, according to the firm’s website. Keiko Kobayashi, a JPMorgan spokeswoman in Tokyo, confirmed the liquidation.
- Canadian mobile phone bills still rank among most expensive in G7: CRTC report (FinancialPost) Canadians continue to pay more for wireless service than the majority of their peers living in G7 countries and Australia, says a report released by Canada’s telecom watchdog on Thursday. Canada won gold for the most expensive low-end wireless telephone service and landed silver for premium mobile phone services that include more minutes and data, according to the ninth-annual international telecom price comparison study commissioned by the Canadian Radio-television and Telecommunications Commission.
- Wall Street Can’t Agree on When to Halt the U.S. Stock Market (Bloomberg) The trading industry can’t find consensus on when to apply the U.S. stock market’s brakes during times of turmoil. On Thursday, the nation’s three major exchange operators upgraded their rules to help prevent a repeat of the chaos seen on Aug. 24, 2015, when many securities suddenly sank. But a major sticking point remains, according to an official who spoke at an event hours after NYSE Group, Nasdaq Inc. and Bats Global Markets Inc. announced their changes.
Overnight markets
- Overview: US 10yr note futures are up 0.5206% at 132-24, S&P 500 futures are down -0.07% at 2180.25, Crude oil futures are down -0.28% at $43.37, Gold futures are up 0.76% at $1360.2, DXY is down -0.53% at 95.352.
US Economic Data
- 8:30 AM: Retail Sales Advance, m/m, July, 0.0%, est. 0.4% (prior 0.6%)
- Retail Sales Ex Auto, m/m, July, -0.3%, est. 0.1% (prior 0.7%)
- Retail Sales Ex Auto and Gas, m/m, July, -0.1%, est. 0.3% (prior 0.7%)
- PPI Final Demand, m/m, July, -0.4%, est. 0.1% (prior 0.5%)
- PPI Ex Food and Energy, m/m, July, -0.3%, est. 0.2% (prior 0.4%)
- PPI Final Demand, y/y, July, -0.2%, est. 0.2% (prior 0.3%)
- PPI Ex Food and Energy, y/y, July, 0.7%, est. 1.2% (prior 1.3%)
- 10:00 AM: University of Michigan, August, est. 91.5 (prior 90.0)
Canadian Economic Data
- There is no major economic news 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