US tsys higher, yields ~2bps lower, 10Y 1.727 (-2.3bps) on good volume in TY1 futures as European stocks decline, gold higher, USD index new highs, crude 1.1% lower @ 46.20. Tsys rose thru overnite session supported by weak stocks & crude. Asian stocks fell, Nikkei down 1.4%. Core Euro bonds higher& flatter led by 3bp rally in long UK gilts. German April CPI came in at 0.3% unrevised while a measure of ECB excess liquidity rose slightly to E833bln. GOCs higher in line with tsys, provi spds unch after closing yest 2bps tighter despite issuance from Newf & BCMFA. Crombie Reit (BBBL) announced a $418mln transaction to acquire a portfolio of properties from Sobeys.
- Stocks Give Up Week’s Gains as Commodities Fall; Yen, Bonds Rise (Bloomberg) The world’s financial markets just can’t shake off a sense of gloom. The MSCI All-Country World Index gave up all its gains for the week on Friday and emerging-market equities headed for a fourth-straight weekly loss as flagging corporate earnings eroded investor confidence. Oil retreated from a six-month high and iron ore fell to a two-month low. Even Germany’s strongest growth in two years wasn’t sufficient to boost the euro, while Treasuries rose with the yen on haven demand and the dollar strengthened against 14 of its 16 major peers.
- Nerves dominate before U.S. retail numbers (Reuters) The dollar was set for a second week of gains on Friday while stock markets fell ahead of a handful of major U.S. and Chinese data releases which may do little to settle growing nerves over the outlook for the world’s two biggest economies. A poor performance on Wall Street on Thursday, driven by another big drop in Apple shares, seeped into Asian and European markets, down around half a percent across the board.
- Euro-Area Growth Revised Down Slightly Despite Germany (Bloomberg) The euro-area economy grew slightly less than initially estimated in the first quarter, though momentum was still the fastest in a year. Led by a better-than-forecast performance by Germany, its largest economy, the euro region expanded 0.5 percent in the three months through March. That compares with an initial estimate of 0.6 percent. From a year ago, it grew 1.5 percent.
- Oil falls as dollar strengthens but traders eye Nigerian outages (Reuters) Oil prices ended a three-day bull run on Friday, falling as a strong dollar weighed and investors cashed in on recent gains, though losses were cushioned by outages in Nigeria that have slashed output there to the lowest in 22 years. The dollar .DXY hit a two-week high against a basket of currencies, lifted by expectations the U.S. Federal Reserve will raise rates again before any other major central bank.
- OPEC’s Stable Market Outlook Gives Few Drivers for Policy Change (Bloomberg) OPEC kept forecasts for global oil supply and demand unchanged in its last monthly assessment before members meet to review the market. The 13 nations of the Organization of Petroleum Exporting Countries pumped 32.44 million barrels a day in April, slightly less than will be required in the the third quarter. Production rose as gains in Iran and Iraq compensated for losses in Nigeria and Kuwait. Investment by the global oil industry through 2018 will slump to less than half the amount spent from 2012 to 2014 following the collapse in prices, OPEC said.
- Hong Kong’s first-quarter GDP contracts on weak exports, spending (Reuters) Hong Kong’s economy shrank in the first quarter from the final quarter of 2015, hit by falling exports and weak consumer spending, with the risk that momentum will slow further. On the doorstep of the world’s second-largest economy, Hong Kong has been buffeted by China’s slowdown. A slump in visitors from the mainland, weak retail sales and falling asset prices have combined to put the economy on the verge of recession.
- Warning of downward spiral, IMF sees no economic upside to Brexit (Reuters) International Monetary Fund chief Christine Lagarde said on Friday there were no economic positives to Britain leaving the European Union and that the impact would range from “pretty bad to very, very bad”. Her blunt warning came as the IMF said the country risks falling into a spiral of weaker economic growth, lower house prices and diminished foreign investment if voters opt to leave the European Union after the referendum next month.
- Overview: US 10yr note futures are up 0.0479% at 130-21, S&P 500 futures are down -0.09% at 2057, Crude oil futures are down -0.96% at $46.25, Gold futures are down -0.35% at $1266.7, DXY is up 0.48% at 94.604.
US Economic Data
- 8:30 AM: Retail Sales Advance, m/m, April, 1.3%,est. 0.8% (prior -0.3%)
- Retail Sales Ex Auto, m/m, April, 0.8% ,est. 0.5% (prior 0.2%)
- PPI Final Demand, m/m, April, 0.2%,est. 0.3% (prior -0.1%)
- PPI Final Demand Ex Food and Energy, m/m, April, 0.1%, est. 0.1% (prior -0.1%)
- 10:00 AM: Business Inventories, March, est. 0.2% (prior -0.1%)
- University of Michigan Consumer Sentiment, May P, est. 89.5 (prior 89.0)
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