Market Update

US tsys slightly lower before July CPI, US 10Y 1.65%, having erased earlier gains, strong volume in TY futures (~600k). Long term tsys continuing to outperform, after well-received UK 30Y auction, 30Y tsy yield fell to 2.095% within 1bp of 2016 record low 2.088% . Situation in Hong Kong escalating with flights cancelled, also a huge miss in ZEW confidence (-13.5 vs -6.3) – German bund curve 4bps flatter.  In Canada, GOCs mostly unch, 10s30s flatter for second day in line with global flattening.

News headlines

Stocks Retreat Amid Hong Kong, Argentina Turmoil: Markets Wrap (Bloomberg) U.S. equity futures struggled for direction after stocks fell in Europe and slumped in Asia as turmoil in Hong Kong and Argentina spooked investors already on edge over the trade war. The dollar was steady as gold and silver rallied.

TSX futures point to flat opening (Reuters) Futures for Canada’s main stock index were little changed on Tuesday, as gains in gold prices were countered by lower oil.

Oil Steadies Near $55 as Demand Fears Mix With Tighter Supply (Bloomberg) Oil steadied near $55 a barrel in New York as persistent concerns over slowing demand jostled with expectations that U.S. crude stockpiles will continue to tighten.

Exclusive: Yuan at right level, disorderly capital flows unlikely – China central bank official (Reuters) China’s yuan is at an appropriate level currently and two-way fluctuations in the currency will not necessarily cause disorderly capital flows, a senior official at the People’s Bank of China told Reuters on Tuesday.

U.S. President Trump asked Japan PM to buy farm products: Kyodo (Reuters) U.S. President Donald Trump has directly asked Japanese Prime Minister Shinzo Abe to buy farm products worth a ‘huge amount’, Kyodo news agency reported on Tuesday, citing unidentified Japanese and U.S. government sources.

Draghi’s parting gift to tie Lagarde’s hands (Reuters) The European Central Bank’s imminent stimulus package is unlikely to cut record low borrowing costs much further but will tie its new president’s hands for much of the next year, giving her little leeway to act while the economy ails.

PRECIOUS-Gold hits more than 6-year high on Hong Kong, Argentina (Reuters) Gold hit a more than six-year high on Tuesday as unrest in Hong Kong and a rout in the Argentine peso drove investors already spooked by the U.S.-China trade war into havens such as bullion at the expense of riskier assets such as stocks.

Market Overview: US 10yr note futures are down -0.096% at 130-08, S&P 500 futures are down -0.28% at 2872.25, Crude oil futures are down -0.96% at $54.4, Gold futures are up 1.25% at $1536.2, DXY is up 0.02% at 97.401, CAD/USD is up 0.21% at 0.7537.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.326% 2 Year 1.592%
5 Year 1.195% 5 Year 1.504%
10 Year 1.188% 10 Year 1.644%
30 Year 1.434% 30 Year 2.116%

US Economic Data

06:00 AM NFIB Small Business Optimism, Jul  Survey: 104.0  Actual: 104.7 Prior: 103.3
08:30 AM CPI MoM, Jul  Survey: 0.30%  Prior: 0.10%
        CPI Ex Food and Energy MoM, Jul  Survey: 0.20%  Prior: 0.30%
         CPI YoY, Jul  Survey: 1.70%  Prior: 1.60%
        CPI Ex Food and Energy YoY, Jul  Survey: 2.10%  Prior: 2.10%
        CPI Core Index SA, Jul  Survey: 263.302  Prior: 262.803
        CPI Index NSA, Jul  Survey: 256.441  Prior: 256.143
        Real Avg Hourly Earning YoY, Jul  Survey: —  Prior: 1.50%
        Real Avg Weekly Earnings YoY, Jul  Survey: —  Prior: 1.20%

Canadian Economic Data

There is no Canadian 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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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