Market Update
Tsys trading lower after PPI/Initial Claims , after being under pressure for most of the early NA session, US 10Y 2.33 (+2bps). Yellen speaks before Senate in part II of testimony, followed by $12bln 30Y bond auction at 1:00PM. EGBs lower , gilts slightly lower outperforming bunds, 10Y bund at new high 0.595%, spread to 10Y tsys below 175bps for the first time since the US election. GOCs sharply lower, underperforming tsys by 2-4bps led by the belly of the curve, with the 10Y above key 1.90% resistance, now 1.92% (+4bps). Follow thru from yesterday’s hawkish BOC has pushed Can/US spds ~14bps wider since Tuesday’s close. Provi spds trading up this morning, yet are unch on the week not benefitting from higher all in Cda yields. The BOC auctions $3.2bln in reopened Sep 1 20s at noon with the Sep20/Mar 20 roll 7.5bps, slightly cheaper (0.3bps) over the week.
News headlines
Relief Rally Spurs Stocks to Record; Dollar Falls: Markets Wrap (Bloomberg) European shares were swept up in a rally that took global stocks to a record after Janet Yellen spurred expectations the Fed won’t rush to end the era of cheap money. European bonds gained while the dollar fell against most major peers.
Oil prices dip as IEA sees waning compliance with OPEC cuts (Reuters) Oil prices fell on Thursday on worries about oversupply as the world’s energy watchdog warned that a long-awaited market rebalancing could be delayed due to weak compliance with production cuts among OPEC members.
Consumers quickly feel the pinch as big banks follow BoC rate hike (Financial Post) Tarek Mnaimne has been considering dipping his toes into the Canadian real estate market, particularly in Toronto or Montreal, but the rate hike from the central bank is giving him pause.
China June trade beats expectations on robust demand, but headwinds eyed (Reuters) China posted stronger-than-expected June trade figures on Thursday, bolstered by firm global demand for Chinese goods and robust appetite for construction materials at home, but local curbs on lending could weigh on imports later this year.
UK budget watchdog warns of long-term Brexit risk for public finances (Reuters) Britain will need to curb public spending further or raise taxes if leaving the European Union does long-term damage to economic growth, underscoring the importance of the country striking new trade deals, the government’s budget watchdog said on Thursday.
China trade with sanctions-struck North Korea up 10.5 percent in first half (Reuters) China’s trade with isolated North Korea rose more than 10 percent in the January-June period from a year earlier, a Chinese official said on Thursday, amid pressure from the United States for Beijing to pressurize its troublesome neighbor.
Overnight markets
Overview: US 10yr note futures are down -0.037% at 125-15, S&P 500 futures are up 0.1% at 2442.5, Crude oil futures are down -0.09% at $45.45, Gold futures are down 0% at $1219.1, DXY is down -0.07% at 95.698, CAD/USD is up 0.09% at 0.7836.
US Economic Data
| 8:30 AM | Initial Jobless Claims, Jul 8, 247k, est. 245k (prior 248k, revised 250k) |
| Continuing Claims, Jul 1, 1945k, est. 1950k (prior 1956k, prior 1965k) | |
| PPI Final Demand, m/m, Jun, 0.1%, est. 0.0% (prior 0.0%) | |
| PPI Ex Food and Energy , m/m, Jun, 0.1%, est. 0.2% (prior 0.3%) | |
| PPI Final Demand, y/y, Jun, 2.0%, est. 1.9% (prior 2.4%) | |
| PPI Ex Food and Energy, y/y, Jun, 1.9%, est. 2.0% (prior 2.1%) | |
| 9:45 AM | Bloomberg Consumer Comfort Index, Jul 9, (prior 48.5) |
| 2:00 PM | Monthly Budget Statement, Jun, est. -$38.0b |
Canadian Economic Data
| 8:30 AM | New Housing Price Index, m/m, May, 0.7%, est. 0.3% (prior 0.8%) |
| New Housing Price Index, y/y, May, 3.8%, est. 3.5% (prior 3.9%) |
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