Market Update

Tsys lower, lower end of overnight range , US 10Y 2.143 (+1bps), equities firmer (S&P futs + 4), gold weaker, crude unch (48.10), while the USD is higher for a second day. Tsys were  pressured in European trading, as Dutch 10Y auction weighed as did the German 30Y linker supply. Gilt 10Y yields higher for third day, 10Y 1.09% after inflation rose more than exp. in August with core inflation the highest in almost six years. OIS mkts still not pricing a full hike until Sep 2018, thou odds for a hike by the second half of 2018 have risen sharply over the past week. Quiet on the data front in the US, JOLTS at 10:00am. The US auctions $20bln in 10Y notes at 1:00pm. GOCs lower, yields 1bp higher in line with tsys. Lull in tier1 data until next week’s August CPI & Poloz speech on Sep 27th.  Provincial spds opening unch after closing 1bp tighter.

News headlines 

Debt soars past $20 trillion mark for first time (WaPo) The federal government racked up $318 billion in new debt Friday, putting it over the $20 trillion mark for the first time in U.S. history, according to new Treasury Department numbers. The total outstanding federal public debt now stands at $20.162 trillion. The spike came after Congress on Friday approved a new debt holiday, allowing the government to borrow as much as needed to keep the government open through early December. President Trump signed the bill, marking the first debt increase of his young administration. Treasury officials had been bumping up against the debt limit for months, using extraordinary measures such as borrowing from other accounts to keep from breaching the limit, which stood at $19.8 trillion until last week’s change. Now free from the debt ceiling, the government was able to begin borrowing again, racking up the $318 billion of debt in one day.

UK inflation rate rises to 2.9% (BBC) The UK’s inflation rate climbed to its joint highest in more than five years in August as the price of petrol and clothing rose. UK inflation measured by the Consumer Prices Index rose to 2.9% in August, up from 2.6% in July, figures show. The fall in the value of sterling since the EU referendum continued to be a major impetus for rising prices, the Office for National Statistics said. But a rebound in the price of oil also had an impact, pushing up fuel prices. The bigger-than-expected rise in inflation comes ahead of the Bank of England’s next announcement on interest rates on Thursday. However, economists said the Bank was still highly unlikely to raise rates at the meeting.

UN passes fresh sanctions on North Korea (CNN) The United Nations Security Council unanimously adopted a US-drafted resolution to impose new sanctions on North Korea on Monday — a move that comes just one week after the rogue nation carried out its sixth and largest nuclear test. The resolution is designed to accomplish six major goals: cap North Korea’s oil imports, ban textile exports, end additional overseas laborer contracts, suppress smuggling efforts, stop joint ventures with other nations and sanction designated North Korean government entities, according to a US official familiar with negotiations.

World stocks build on record highs as Irma weakens (Reuters) World stocks climbed to record highs on Tuesday as an easing in tensions over North Korea and signs that Hurricane Irma was causing less damage than feared in the United States boosted risk appetite. The MSCI All Country World Index edged up 0.2 percent, building on Monday’s 0.9 percent gain — its fourth-biggest so far this year.

German economy to grow by more than two percent this year: BDI (Reuters) The German economy is set to grow by more than 2 percent this year adjusted for calendar effects, which would be the strongest rate in six years, the BDI industry association said on Tuesday as it lifted its growth forecast for Europe’s biggest economy.

OPEC Data to Show August Output Falling as Saudis Cut (Bloomberg) OPEC’s estimate of its oil production is expected to show a decrease in August from July as the group’s biggest member Saudi Arabia pared output, according to a person familiar with the matter.

May’s Brexit Law Passes First Hurdle as Rebels Demand Re-Writes (Bloomberg) Theresa May’s plan for taking Britain out of the European Union passed its first parliamentary hurdle as pressure mounted on her main political rival, Labour leader Jeremy Corbyn, to clarify his stance on single market membership. In a vote after midnight, lawmakers backed the prime minister’s repeal bill after her government promised to discuss critics’ concerns before they have to vote again. Labour has already proposed a first set of amendments. The focus now turns to Corbyn, who is due to address the Trades Union Congress in Brighton Tuesday after sowing confusion over his position on Brexit.

Here’s what Wall Street expects out of the Apple iPhone event (CNBC) Analysts are giddy with optimism, predicting Apple will unveil the most innovative iPhone in years on Tuesday. Apple Special Event : Join us here September 12 at 10 a.m. PDT to watch the keynote, the first-ever event at the Steve Jobs Theater.

Overnight markets 

Overview: US 10yr note futures are down -0.209% at 126-24, S&P 500 futures are up 0.14% at 2489.25, Crude oil futures are up 0.58% at $48.35, Gold futures are down -0.22% at $1332.7, DXY is up 0.09% at 91.958, CAD/USD is up 0.25% at 0.8237.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.551% 2 Year 1.327%
5 Year 1.761% 5 Year 1.732%
10 Year 2.042% 10 Year 2.153%
30 Year 2.394% 30 Year 2.761%

US Economic Data 

10:00 AM JOLTS Job Opening, Jul. (prior 6163)

Canadian Economic Data 

There is no major economic data release 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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230