Market update
US tsys higher for a fifth day, US 10Y below 1.635 (-1bp) on ‘risk off’ as the Nikkei fell 3.5%, European equities lower for a fourth day, GBP off 0.60% close to two month lows before Brexit vote next week. Tsys gapped higher at the open as the Nikkei fell to two month low and the Yen strengthened hurting exporters. Core Euro bonds lower, 10Y bund 0.026% (0.6bps) – Allianz saying German bunds are in ‘bubble territory’. Central banks the focus this week along with May retail sales & inflation no.s in the US – the Fed, SNB, BOE and BOJ all hold meetings. GOCs are unch, calendar is bare but picks up with Manuf sales on Wed and CPI Thurs. Provis 0.5bps wider with buying on screens, Ont 46s @ 108, Ont 26s @ 97.5 – spds moved 5bps wider last week , CMB 5Y expected this week.
News headline
- U.S. Index Futures Drop as Investors Shun Risk Across the World (Bloomberg) U.S. stock-index futures mirrored declines in global equities as caution permeated financial markets ahead of political and central-bank events. Contracts on the S&P 500 Index expiring in September fell 0.3 percent to 2,081 at 7:18 a.m. in New York. On Friday, the worst selloff in more than three weeks dragged the benchmark further from a 10-month high, frustrating another run at a record. Dow Jones Industrial Average futures also lost 0.3 percent, or 54 points, to 17,722 today, while those on the Nasdaq 100 Index dropped 0.5 percent.
- Brexit fear factor sends stocks spinning (Reuters) Fears Britain is on the verge of voting to leave the European Union next week coursed through global financial markets on Monday, sending Asian and European shares sharply lower and the pound to an eight-week low. The world economy is looking shaky and weak jobs data suggest even the United States is not ready for the higher interest rates that banks say they need to shore up profitability, while concerns that a vote for Brexit could tip Europe back into recession have lurked in the background for weeks.
- Oil prices under pressure from rising economic concerns (Reuters) Oil prices fell on Monday, weighed down by gloomy economic prospects in Europe and Asia and a related strengthening in the U.S. dollar, which makes fuel imports for countries using other currencies more expensive. The softening comes a week after crude prices hit 2016 highs on the back of a quicker-than-expected rebalancing in physical oil markets. Brent crude oil futures fell to $50.03 per barrel, at 0921 GMT, down 51 cents, after trading as low as $49.80.
- China must quickly tackle rising corporate debt, warns IMF official (Reuters) China must act quickly to address mounting corporate debt, a major source of worry about the world’s second-largest economy, a senior International Monetary Fund (IMF) official said on Saturday. David Lipton, first deputy managing director of the IMF, warned in a speech to a group of economists in the southern city of Shenzhen that companies’ indebtedness is a « key fault line in the Chinese economy ».
- China investment slows to 15-year low, more stimulus seen despite debt fears (Reuters) Growth in China’s fixed-asset investment slipped below 10 percent for the first time since 2000 in January-May as a boost from record credit growth seemed to be quickly fading, putting expectations of further stimulus back on the table. Analysts say a sharp deceleration in private investment could jeopardize China’s growth target of 6.5-7 percent this year unless the government pumps even more money into the economy, despite growing global fears that the country is already amassing too much debt.
- OPEC Sees Global Oil Market Balancing Toward the End of 2016 (Bloomberg) OPEC predicted that the global oil market will be more balanced in the second half of this year as demand rises and rival supplies falter, echoing views expressed by ministers at the group’s meeting this month. The Organization of Petroleum Exporting Countries kept estimates for world supply and demand in 2016 unchanged in its monthly market report. Disruptions in Nigeria reduced the group’s output to 32.36 million barrels a day last month, a little below the 32.6 million average required to satisfy estimated demand in the second half.
- Pension reformers urged to consider younger Canadians (TheGlobeandMail) A group advocating for younger Canadians is urging finance ministers to think more broadly about why some people are not saving enough for retirement, including factors like ballooning home prices, student debt and the cost of child care. Federal Finance Minister Bill Morneau has said he is optimistic a deal to enhance the Canada Pension Plan can be reached at a meeting with his provincial counterparts June 20-21 in Vancouver, with approval of final details to follow in December.
Overnight markets
- Overview: US 10yr note futures are up 0.0594% at 131-20, S&P 500 futures are down -0.31% at 2080.75, Crude oil futures are down -1.1% at $48.53, Gold futures are up 0.86% at $1286.9, DXY is down -0.07% at 94.506.
US Economic Data
- There is no major economic data for today
Canadian Economic Data
- There is no major 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, David Leclair-Legault
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230