cti2015header-morning comments web

Market Update

US tsys lower, giving up gains despite bond friendly data on retail sales & PPI, yields bps lower out the curve with the curve 1bp steeper, 10Y 2.34 (-2.3bps). Tsys were initially weaker in Asia following Yellen’s hawkish comments yest aft, noting the improvement in the US labor mkt as well as a pick up in wage growth. Tsys rebounded in London on weaker USD (DXY lower for 3rd day) and lower crude. UK gilts, bunds underperforming curves steeper. Mkts await UK PM May’s speech on Brexit next Tuesday & new 40 yr Gilt syndication expected the week of Jan 23rd. GOCs lower in line with tsys, off the lows after 8:30 data, while provincials weaker for a second day, closing 2bps wider yest despite no issuance thou long issuance from QC & Ont as well as Sask possible today. CPPIB (AAA/Aaa) in the US mkt with a 5Y benchmark.

News headlines 

Dollar Falls, Stocks Climb as Trump Optimism Cools: Markets Wrap (Bloomberg) The dollar headed for its fourth weekly loss against the euro, the longest stretch since March 2014, as investors lose conviction in strategies they’ve pursued since the election. U.S. equity futures climbed before bank earnings season kicks off.

Oil set for weekly fall on doubts over extent of OPEC cuts (Reuters) Oil prices are on track to end the week lower on lingering doubts over the extent of OPEC cuts, with sentiment worsened by concerns over the health of the Chinese economy after it reported the steepest falls in exports since 2009.

China posts worst export fall since 2009 as fears of U.S. trade war loom (Reuters) China’s massive export engine sputtered for the second year in a row in 2016, with shipments falling in the face of persistently weak global demand and officials voicing fears of a trade war with the United States that is clouding the outlook for 2017.

Yellen Sees No Serious Short-Term Obstacles for U.S. Economy (Bloomberg) Federal Reserve Chair Janet Yellen said the U.S. economy faces no serious short-term obstacles, though it must deal with important long-term challenges of low productivity and growing inequality.

Diesel cheating inquiries widen to Renault and Fiat (Reuters) European carmakers were drawn into widening investigations into diesel emissions cheating on Friday, with French prosecutors examining Renault and British authorities seeking answers from Fiat Chrysler Automobiles NV.

Shaw Communications Inc profit drops almost 60%, mainly on the costs of shutting down Shomi (FinancialPost) Shaw Communications Inc. reported choppy first-quarter results Thursday despite its cable business faring better than analysts anticipated, posting a sharp profit loss mainly due to a charge from shutting down video-streaming service Shomi.

Overnight markets

Overview: US 10yr note futures are down -0.0626% at 124-26, S&P 500 futures are up 0.07% at 2265, Crude oil futures are down -0.68% at $52.65, Gold futures are down -0.08% at $1198.9, DXY is down -0.27% at 101.08, CAD/USD is up 0.01% at 0.7607.

US Economic Data 

8:30 AM PPI Final Demand, m/m, Dec, 0.3%, est. 0.3% (prior 0.4%)
PPI Ex Food and Energy, m/m, Dec, 0.2% , est. 0.1% (prior 0.4%)
PPI Final  Demand, y/y, Dec, 1.6%, est. 1.6% (prior 1.3%)
PPI Ex Food and Energy, y/y, Dec,1.6% , est. 1.5% (prior 1.6%)
Retail Sales Advance m/m, Dec, 0.6%, est. 0.7% (prior 0.1%, revised 0.2%)
Retail Sales Ex Auto, m/m, Dec, 0.2%, est. 0.5% (prior 0.2%, revised 0.3%)
Retail Sales Ex Auto and Gas, m/m, Dec, 0.0%, est. 0.4% (prior 0.2%, revised 0.3%)
10:00 AM Business Inventories, Nov, est. 0.6% (prior -0.2%)
University of Michigan Sentiment, Jan P, est. 98.5 (prior 98.2)

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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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